Top 10 Go To Market Mistakes Founders Make Again … and Again with SaaStr’s Jason Lemkin

the reason they left the game is because they didn't want to be in the game sales is hard it sounds like I'm being critical of those folks and to some extent I am but here's the tough part about sales in particular it can burn you out and I haven't seen too many folks in sales they get burnt out by sales and then magically Rebound in two years and are excited it should work that way I know what happens with some Olympians I know what happens with some Founders but I just think what happens in sales

is it's not just tired there's fear and when fear sets in sales it it's almost unrecoverable first of all thanks for everyone for actually making me feel better I'm pretty positive although realistic as those of you follow our content know but there's some freaking Debbie Downer ISM a lot of Grouchy people on LinkedIn a lot of growth stage VC's saying from their fancy offices that they're never going to make any money on their unicorns and there is just a lot of grouch isms and I wondered coming this year this be like a what would the

vibe here would it be a bunch of Debbie downers and and grouchy people from LinkedIn but it's great every single person I've talked to has been positive it's great I don't see any negativity I see us all building I see a lot of folks being feeling pretty good and being rational so thank you everybody for for picking me up a little bit not that I was down but it's a good sign it's a good sign you almost wonder with the grouchiness does anybody need a saster if everyone's going complaining about having to go to the

office or hit a quota but it is is good to hear we are still building amazing companies one thing as an aside for almost two years we have done a live Workshop Wednesday it's every Wednesday 10: a.m. Pacific frankly what we do is we will look at the 200 pieces of content we had and we'll basically invite the the 50 best to come back do it again but better and then take more of your questions on zoom on the internet then we then I pick and choose other great speakers over the years it is great

we 10 years and literally 10% of the people I've talked to even though we do it so if you like this cont content just go to sas.com on the right there's Workshop Wednesday click and sign up it's free you can join it anyhow I did one of these and it was great but a very small number of people saw it and I wanted to update it thinking on the last 18 months what are the top 10 founder goto Market mistakes I see some are old some we've been writing about for over 10 years in saser

but some are new because the world has changed expectations have changed especially for the team so I just wanted to summarize some things um to help you distill all the mistakes we make um and this one is really this was always an issue pre-2020 but the number one issue there is reason the number one reason I see startups struggle at your stage in today's world is they hire a VP sales that either doesn't want to sell or doesn't ever want to learn the product and I I told I think I told a funny story on

some disaster thing before we I interviewed a whole bunch of maybe 50 or 100 VPS of sales the last year for ourselves for portfolio companies or others VPS of sales I can't tell you how many by the fourth or fifth interview didn't really know what the product did did you watch the explainer video did you go to a video did you hit the trial no I haven't had a chance yet you've done four interviews you met twice with the CEO when we interviewed for little team saster almost no one had any idea what we actually

did VP is a sales VP is a sales so they don't know it and I guess some of it is that we interview over Zoom now for first interviews but it's terrible and I'll tell you two other specific stories a company I invested in that's coming up on 16 16 17 million in Revenue but it's had a tough last 18 months like some of you have and I knew the vpa sales I didn't put them into the company but I knew them a little bit and I recommended him I didn't know him personally I didn't

actually do the work to fully recommend him but I said hire this guy and in the sort of disaster tragedy story six months in sales went down you bring into fpia sales and sales went down he hired 10 people he brought in a team in sales went toown it's the tragedy the S tragedy story but he was honest enough to not hide from it at the board meeting he was honest enough to not blame me the Lord Our God the the weather whatever he said honestly I've been here 6 months this product is much more

nuanced than my last product the sale is more complicated and I just never really learned how it worked I never really learned how it worked and when people would interview with this company they would call it the gong of something the gong of another category and that was great and everyone's oh I'm going to join the gong of this but it was barely true okay the product was much more nuanced much more Enterprise much more workflow and he would go into head-to-heads with their competitors where their VPS sales knew their product cold he would lose

every deal oh we're the gong of this do you integrate with and how does he integrate with workday and sales and how do the workflow how does the automation how does the analytics work I don't know I got to get Julie I got to get Bob never understood it and this is someone I like and Trust And now when I see vp's sales fail in 2024 and 2023 I always ask them if I know them or the co did they ever know the product and they never know the product and at that same board meeting

when the vpa sales admitted it honestly the CMO actually I knew her and I'd put her into the company and she raised her hand on zoom and said honestly I don't know the product either I don't know the product and you can laugh okay but I can give you a lot of stories I can give you a lot of stories this is they don't know the product here's my rule and this used to be the rule when we all worked in offices and this used to be the rule in the old days before anyone in

sales from the bottom to the top starts they got to crush the demo for you they don't we don't do this anymore as Founders in the old days any salesperson would come into your office and maybe they'd be nervous or maybe they wouldn't and they get in front of the whole wholeale sea they'd have to do a pitch if anyone's been around for more than 5 years you might remember these days you had to pitch the whole team and and that's the job because it's sales I can't tell you how many sales folks never do

a pitch before they start they never do it maybe it's okay for a rep I don't believe so but if VP a sales it's too late you hit the ground running you've got to build the team you've got to build the playbooks and they never ever learn it so whatever you do I would C never give anyone an offer letter before they give you a demo from cero to Junior SDR I would never give them an offer letter if you're foolish enough to do don't let them start until they can do a demo I then

I would tell them take a week off take a paid week before you start take two take four weeks and actually start Mr Miss CR when you can demo this product because it's just too late they think everyone thinks today oh and I asked them what do you think oh I'll learn it when I get there I'm good at sales I'll learn it because I'm a people person I'll learn it my customers love me that's sales my customers love me it's too brutally competitive today that one that I knew that I trusted people love this

guy his customers loved him but the compet the AI driven competition ate his lunch because he never knew the product okay so don't do it they need the demo don't make the higher the related one which was always a little bit of an issue before a couple years ago but was the world changed when Capital flooded the markets in 2021 is this third version of it do not hire a VP a sales that won't carry a bag that won't sell sell themselves it's funny in the early days of SAS one of the earliest posts I

wrote does a VP sales need to carry a bag and I wrote a lot of the a lot of the things I had strong opinions on I said in the early days I'm not sure and the reason I said I wasn't sure is let's imagine you're joining a a startup at 2 million and you want to go to Six Million and your deal size is and and and you you want I want to say let's keep it simple you want to go from two to six and your sales reps on a yielded basis to 400k

okay and your VPS Sals comes in there's one rep which is pretty common to go from two to six to add 4 million bookings they're going to have to hire 10 reps so if you ask them to wait 6 months carry a bag be a rep themselves they'll never hire their people there won't be enough time you'll miss the plan but I realized this time went by I was lucky because my first my second VP of sales Brendan Cassidy had did this what I got wrong was he when he was the first head of sales

at LinkedIn LinkedIn was an early EO sign Adobe sign customer he' used my product in the field for 18 months so I took it for granted Ed that someone could pick up that that someone didn't have to carry a bag in the beginning to get smart on the product but he Not only was Brendan great you've probably seen some of his content he was already a customer he' already used the product hundreds and hundreds of times himself and for his team in the early LinkedIn sales team today there's too many folks who are burned out

my friends there's too many folks who are burned out the last couple years there's too many folks who want a VP of sales but want to look at dashboards there are too many folks who are VPS of sales that aren't willing to travel any anymore they've gotten comfortable at home they're tired there are too many VPS of sales that quit when it was good to be a fractional cro and I know this can be triggering to be fractional or have 11 clients and now there's not so much money and they're forced to get a full-time

job but the reason they left the game is because they didn't want to be in the game sales is hard it sounds like I'm being critical of those folks and to some extent I am but here's the tough part about sales in particular it can burn you out and I haven't seen too many folks in sales that get burnt out by sales and then magically Rebound in two years and are excited it should work that way I know what happens with some Olympians I know what happens with some Founders but I just think what happens

in sales is it's not just tired there's fear and when fear sets in sales it it's almost unrecoverable it's the one symptom where if you're ever deciding should I give my VP is sales more time we've talked about this for years in saster the numbers aren't improving things look okay or this or that looks okay the the number one way whether to keep ahead of sale is as if fear sets in it's unrecoverable when the VP of sales no vpa sales takes a job where they don't think they can sell when they start but eight

times out of 10 it's harder than they thought you hear so much in today's world so many folks criticize my CEO told me it was so easy my CEO told me we were growing 300% but it turned out to be 30% my CEO told me this whatever really happened what they're complaining about is it was harder than they thought it was harder than they thought going in that's on you as Founders to be more transparent but when it crosses the line to fear when they don't think your product is sellable when they feel like it's

not their fault it's product's fault a little bit of this is okay in sales but if it's con I can't win a deal because whoever has been here today because deep L is so much better because graphon Labs is eating our toast because Howard from Rome he's got all that money from NE y we can't beat him when you hear that too much it's hopeless so make them carry a bag make them do it make them do the demo or it just won't work you can't hire I know it's tough you can't hire the burnt

out you can't hire the broken in sales you can hire the folks that don't want to do it and I'll give you one last story I briefly maybe told this on a webinar before but a version of this that doesn't want to carry I when I I interviewed this VP of sales from a that had been both at a startup you've all heard of and then a public company you've all heard of and was highly regarded in sort of my sales community in the Bay Area people loved them and he'd gone to a higher flyer

and it hadn't worked out he gotten fired but so be it like actually I think a VP sales that's been fired once not all the times but once can be a great hire because you want the Pirates and Romantics you want the passionate ones and sometimes those passionate ones have a conflict and they're you don't want them to have conflict with all their bosses but if it's just one it's not that bad so I don't view that as a flag but I do want to learn what happened and he comes in and he's I've got

six reps to bring with me I've done this I know this cold I know saster cold and this guy lived in the East Bay this guy if anyone's you won't really know it but if you've been to the Bay Area there's a town east of San Francisco east of Oakland called Pleasanton it'll take you about if there's you can take the BART so it's going to take you 45 minutes to an hour to get to the city and he said I'm willing to travel to meet six figure customers but only in the espb I won't

go as far as San Francisco or Palo Alto anymore I'm not willing to do this anymore and he's just broken and I get it and it's fun to work in your pajamas and your sweats at home and all of this and the person that introduced me to him I highly respect and he argued with me he yelled at me he's like how can you not hire this person I'm like are you not listening like he won't leave he won't take off the pajamas and he won't go to San Francisco or Palo Alto so just you

can't hire these people if they don't want to sell and the trick was and then at the end of the interview I already knew it was hopeless right but then I asked him are you willing to carry a bag are you willing to sell yourself the begin is no my team will do the selling this is a way to normalize all these issues to normalize that won't leave the house won't travel won't learn the product push them in 20124 will you carry a bag just for a quarter carry a quara for a quarter I used

to not be sure now I think it's 100% required they've got to sell themselves and if you hear hesitation in their voice they ain't going to do it if you hear a maybe don't make the higher you need to hear a salesperson that still wants to sell the answer is of course of course the first week I'm going to meet on be on the road the first week I'm going to meet customers the first week I'm going to do this so this is just accelerated as people have gotten burnt out as it's harder than 2021

as people like to work from the pajamas more power to them do not hire someone that can't sell or demo the product number one we that could be the end of the presentation and that is new that this is much more common than before 2021 22 certainly much more common than when we worked in the office okay the second one this is actually an old one this is an early the saster oldies will remember an Old Post don't you hire the wrong vpm marketing all you'll get is blue pens with your logo on them if

you talk to oldies they all that was the GAA I live that I hired a vpa marketing and all I got was sweatshirts all I got was t-shirts all I got so many folks said I got blue pens with my logo on them and it's not their fault we made fun of that but time has gone by and what I really realize is what happened is they hired a field marketer they hired someone that not we at an event they hired some of the not events and yes blue pens with your logo on it is

not the the number one way to get leads here but it's part of the toolkit but if you're not doing field marketing it's not what you need and a mistake that was always true 10 years ago but is accelerated now as there's more veterans right there's so many great SAS companies out there so many great Cloud companies they're spinning out directors and managers and VPS looking for their new roles there's orders of magnitude more candidates and they're used to be and they're hiring so many marketers that don't know how to get you leads they don't

know how to get you demand they don't know how to get you Dem man gen don't hire up someone that's a product marketer you don't need at 2 million5 million even 10 million a you don't need 11 pages on your marketing site explaining how different segments of your Market are critical you will need that someday you will need that when your or data or when your data dog with eight products or Sam Saro with six products or even HubSpot with five products if you got five products and three segments like small medium and large you're

going to need 15 Landing Pages for these segments that ain't you so don't hire a product marketer I just caught up an old sasro Super Fan just crossed 15 million AR and he begged me to do a zoom the other day to catch up I didn't we were coming to Europe I didn't have time I like okay let's do it and these things are good and bad at 15 million like we're growing 60% I'd like to grow faster we're going we have tons of money but my marketer and salesperson doesn't seem to be working out

so the sales I asked does he or she sell themselves what do you think the answer was no I'm like okay we can end this is not working and then what's wrong with your Mar marketer I really love bill I love him to death but it's not working I'm like what's his background product marketing he doesn't know anything about growth does he do growth marketing does he do social does he do webinars does he do anything he's no but we have three great product landing pages now after four months and the and he doesn't know

he's actually an engineer by training first-time founder doesn't know what marketing is and a lot of us the folks in product marketing the big tech companies are super super smart they're they're often smarter than your average marketer because they 2,000 hours a year staring at a website talking amongst themselves around segmentation in markets and then building collateral that's not what you need right you don't need a corporate marketer you don't need a brand expert at your stage until you have a brand when you when everyone has heard of you you can hire a corporate or

brand marketer that's great when I went to Adobe in my brief tenure when we were acquired there they didn't do any demand gen that we of because everyone was an Adobe customer what do you do when everyone's a customer right one you have account managers because you call on customers because you already have them and two you run a lot of brand marketing so people remember to buy more you run TV you run media and you talk about Adobe and creeks and streams and things like that we make fun of as Founders but that's because

everyone's heard of you it's not you when you hire this corporate marketer this brand marketer you're going to have the the most beautiful streams and videos you've ever seen and you're going to have no leads you're going to have no leads the third one is new and the last one's the cheat code the third one is new the last one the cheat code the new thing in 2023 2024 in Mar this is true in every functional area actually but it's especially true in marketing everyone's a strategist we need we do a lot of social media

saster I don't know if you knew we do a lot of blog posts and tweets and stuff so we were trying I was trying to we're trying to hire someone for social media I interviewed someone 22 years old the other day she knew saster wrote a great email she's yeah I need about a team of five to start had less than 12 months of work experience as dear as I could say so usually I read someone's LinkedIn but I didn't because the email was so good I pulled up her LinkedIn first line what do you

think the first line is strategist I'm going to simplify everyone wants a team today and what happened was the problem is in 2021 everyone got a team there were a thousand unicorns and when you raise instead of raising 10 million you raise 50 million or 100 million it's not that as a Founder you're like I don't really think we need 22 people in this department or 40 but you have 99 problems right and you use cash to solve some of them and if instead of we used to do something with two people in marketing now

we need five and if we need 20 people in engineering instead of 10 or product you just did it if you had $200 million in a bank $100 million in the bank now not the most of we did but it changed our culture and it meant everyone wanted a team and as a team they became strategist so here's my cheat code honestly for any role but 100.00% for marketing if you like a marketer if they're smart if they're intelligent look at their LinkedIn and see what their first line is if it says strategist thank them

send them a blue pen with your logo on and do not hire them trust me not 99% of the time and on these strategists bear in mind if they're more senior your board investors will love them because they don't know what marketing is these strategist are great what are board what do VC's do all day long they're strategizing the future of ai ai is going to destroy your startup AI is going to take over everything that's what VC's do so VC's love the strategist they don't know they don't know open up the LinkedIn if the

first line strategist send it to your worst friend send it to your enemy send it to your competitor hey Bob and my competitor haven't heard you for a while I'm glad you're doing well too have you looked at Elena for marketing we're a little small but I thought she might be a great fit for you and the flip side is do not whatever you do not hire them if strategist is the first the if you want a marketer to get you more leads more opportunities more pipeline more customers the best ones up until even 20

30 40 million all have one thing the same on their LinkedIn their first line is their commit I got 123% of lead commit I got I hit 118% of my mqls to sales my mqs my marketing it doesn't really matter what the acronym is on the stack of the PIP L from leads to opportunities to revenue the best marketers demand gen marketers are machines to generate pipeline that they hand either to sales or sometimes if if it's a true plg some of it sells itself but what do they brag about like they don't brag about

the blue pens or even they brag what they did and that first line they're going to tell you just like almost every salesperson on planet Earth their first line of their LinkedIn is President's club or 118% of of the quot every salesperson on LinkedIn hit over 100% of their quota which is just is great every single one but you don't but if you go and just pop into LinkedIn marketers you're going to see very few on their first line do they brag about the amount of money they brought into the company very few when you

see it make the hire so you got to hire there's so many marketers so many people with marketing was an issue 10 years ago but it's a bigger it's a bigger issue today if you want leads ask them what was your commit at your last company what was your commit it could be a lot of things I don't know I don't know Bob on my team handled that I don't know I'll have to get back to you don't hire that marketer no matter how smart they are you don't need the strategist okay third one I

don't know if this is more common today but it is super common in the conversations I'm having with Founders it seems more common which is Founders hiring a revenue team a go to market team and stepping out of sales Founders who are like I don't really like sales I don't it's icky it's sleazy I I had to do the founder Le sales because I didn't have anybody thank God that I hired Taylor now I'm getting back to product and this is what I hear I used to hear this a little bit but now I hear

this all the time thank God I can get back to product thank God I get back and maybe what's changed over the years is that every category is more competitive now it's not just that there's more vendors it's that software is better every couple years right it got better and better now with AI it's even more competitive right you you have to have feature parody in Ai and so Founders are stressed and they're stressed about the competition they're stressed about convergence now ripling launched 118th product Oh my God data dog it's 47th product and it's

stressful this convergence and so I got to get back to product guys I'm the product Guru and so Bob my new cro Elena I'm out I'm out I'm out of sales not 100% of the time but at least 90% of the time sales Falls sales Falls there are this Elite level of crazy VPS to sale cros that have done it before and have startup experience but still want to carry a bag and already were your customer before and already knew everything and they check every single box and they're and the reason is they B they're

so fluent they border on a co-founder they have that level of fluency in the product the market your co-founders have if you really hire that person the almost co-founder sure step out of sales train them a little bit back fill them be there for questions help them but if they are better than you on day one on everything in sales sure of course you can get out but be more honest can they demo as well as you do they know the objections do they know the Integrations do they know how the API Works do they

know the competitive landscape as well as you do they know why you lose usually 99% it's zero so what happens when the founder steps out of sales these tough deals just don't close so you can't do it because you hire VP a sales and then just a couple nuances here even when you hire the great one the great VPS of sales don't let you get out of sales the great VPS of sales and SOS just change what the founders do and they turn you into dedicated middlers when you start for founder Le sales you're an

opener a Midler and a closer you got to find the customer somehow you got to do the demo you got to convince them to buy and then you got to ask for the money and close right any great VP of sales will be a better opener and closer than you almost always opener and close they'll spend 50 hours a week hunting and then when any deal comes in that's good they will be relentless for closing it and Founders were never like a few of us are Relentless closers but mostly we're at best mediocre closers we

get a little nervous we think asking for money is a little unseemly we don't know how to maximize the deal size we don't know how to pull it in for the end of the month or the quarter the great Feb sales are great at that but they know that when I bring a CO into the deal it increases the odds it closes the co not only is the probably still the product expert the vision expert the industry expert but also at a practical level I know all of you guys have learned this but let me

remind you customers love to talk to the CEO they love to talk to the CEOs of Nvidia which is why what's his name is everywhere they love to talk to the CEOs of Microsoft which's why saas on the road Mark benof goes to Davos he said the other day he goes to Davos the event in Switzerland with all the VPS and he sits at the top of a staircase all day to meet customers like Salesforce is too big he can't meet all of them so he goes where the VIPs are and he has a spot

he's been going for 10 years and he just stands at the staircase and says hi to his customers okay that's being a great Midler even at 30 billion in revenue and you a great VP of sales in fact will give a CEO a meeting quota per month and say I need you to do 10 Dooms and two inperson meetings a month a great VP is sales will literally give the co a quota you don't see this often but you see it pretty often with the best ones so my point of that is even the ones

that let you step out of sales don't let you step out of sales because they want you to be the Midler so no I know when you hire the VP Sals you want to get back to product you want that time back I am sorry you never get it back and you will profoundly regret it when you step out of sales and then just two nuances here one Trend that is newer with company especially with companies that are more well-funded in the old days we had I'm meat from gong his series a was 7 million

right today a series a is double digits Christoff Jans is here somewhere I think he said the zenes series a was like three million two million right but now that we're H now that the the B rounds are 20 30 million even though they're harder today don't get me wrong it's not easy but as the rounds are bigger more and more Founders want this coo they want a COO to to manage half their team and we could talk about pros and cons but what I see way too often is a version of this these days

the founder that wants to get back to product hires an expensive fancy coo from somewhere great Loom got acquired I'm GNA hire Billy from Loom to be my CEO whatever and they exit sales and think this coo who still doesn't know the product doesn't really know the competive Can magically own sales for them I see this is this is a subtle point but if you're thinking a COO can replace you with maybe it's scale but there's a reason Mark benov also has to keep firing all his presidents and co- CEOs they're not they can't do

this has to go to these deals it's tough so coo to manage certain functions great but to replace you in sales it just doesn't work I know you want it but I just I don't know why this is accelerated but it may be the capital for the COO and the competition but don't do it point four this one this one is new this one is new and it this is what we talked at our this is our closer we talked at our opener about the segment of SAS the B b2bs that are decelerating right we

talked about the shock to the system of going from 40 to 17% Salesforce shrinking to single digit growth uipath cutting its guidance in half what's happening here there's a lot of things there's macro impacts there's budget contractions but a lot of these folks have cut their marketing budgets to almost nothing and when the first kind of shocks happened in some seg again not all segments are impacted some folks are crushing it the canvas and the net Scopes and crowd strike yesterday announced a massive quarter I think there are two billi ion or something no no

issues in security but when growth comes up short and you actually have many of you don't even have a marketing budget yet but when you have a marketing budget 2 million 5 million 10 million or more no one really wants to do layout there's always one or two people you want to let go thank God I finally have a reason to let go of Lin but we don't want to do layoffs and we certainly don't want to cut sales because we need s we know we need sales right we certainly don't want to do that

and we can't fire any of our good engineer where's what can we cut so first can we cut the office oh I forgot we let go the office what is there to cut right we can't get rid of the kind bars anymore if you don't have an office people cut the Retreats which I think is a mistake I see folks doing annual getting the team together once instead of a quarter I think that's dumb but my real point is the simplest thing to attack is that marketing budget that's marketing budget let's not spend the money

on it let's certainly not spend anything that has a longer lead time like for example sponsors here a lot of these are back but a lot of folks that were here last year cut their marketing budget to zero they're not here it's not cuz they don't love saster in some cases the marketing budget literally is zero I talked to a public company the cro c c CMO doing multiple billions who called us a couple weeks ago saying I can't do SAS Europa this year multip and this company is massively profitable he said why my marketing

budget just got cut to zero said I want to be an annual in September I can't do it I know I told you it's fine it's fine this is a multi-billion doll company that has pressure and so the co cut literally cut his budget to nothing so look the reality is when when you cut salespeople you cut your present when you cut marketing you cut your future and it's a tough call but I I genuinely think a lot of SAS companies are public companies are too efficient and one reason a lot of them aren't going

to get better is Salesforce wants 50% operating margins the only way you can do that is spending nothing on sales and marketing right that's an extreme example what way too many startups have done is cut it to nothing just nothing the sometimes the only thing they'll do is very limited digital stuff with an instant Roi a Facebook ad a little bit of a little bit of LinkedIn ads but it has to be it can't be even building pipeline I want to see customers this quarter and if you're and almost everything in marketing is going to

have a longer sales cycle than an inbound lead that says they want to buy today so when you cut marketing you cut your F so look I don't know the answer to all you if you have to cut you have to cut but what I learned from the first great I remember the first great marketing leader I'd never worked at I knew nothing about marketing and I was working at a startup in the early days and it it exploded and then it had some tougher times I still did find out at tougher times and the

CE called all the executives together and said listen we all got to cut like 20% no there were no layoffs we got to cut expenses and I loved our VP so grouchy we can't we we need more people like everyone was grouchy we only had one veteran we only had one person that actually done a start before VP marketing Greg and he said got it tell me my budget and I'll tell you what I can hit the pro and he did and so this is my last point if you trust your vpm If you hired

the product marketer you didn't get any leads the that's on you but if you hired someone that knows how to build pipeline build opportunities build leads and times are tougher trust them come up with a budget give them whatever it is $20,000 a month two million a year whatever you have to give them challenge them debate it don't don't be wanting but trust them to fores shrink that spend and keep it going don't cut it to zero literally again a multi-billion dollar AR public company with 40% margins told us the other day their marketing budget

was cut to zero I'm not going to tell you this company I love it but I might short it because it doesn't bode well for the Future Okay point five this is new and we've talked a lot about we've had some Pure Play AI folks here the SAS and deep LS and folks adding Ai and OG AI like gong and there's a lot to talk about but let me talk about one thing that is under discussed and know it AI for a lot of us in B2B it's confusing and a lot of folks in developer

side it's confusing that many of you may not think that AI is magical M some of you may think that adding a lot of hallucinations to your application next week does not make it better A lot of you may be making fun of things a lot of you may be saying I don't need to make cartoons out of text when I'm serving accountants or I I met a great founder doing SAS for asphalt for roads he may not need AI today to do project management for asphalts and roads it's not always magical B2B today the

way it can be in other spaces I'm not a cynic I believe but I I think it's not I don't think we're going to fire our sales teams tomorrow I don't think any of this stuff but you've got to understand two things this is where all the budget is that is being added as an AI and more importantly this is the mistake I see Founders make it's where the competition is and I see startups that do not have ai feature parody they do not have ai feature parody everything else is great okay but intercom automates

all the chats or whomever automates all this with AI in today's world if you go into a bake off a competitive bake off and your competitor is making real or fake promises with AI and you cannot compete you're going to get slaughtered especially in the Enterprise you're going to get slaughtered you're going to get slaughtered customers are not stupid people are not stupid are customers being oversold in Ai and B2B absolutely are they are we already seeing backlash in the Enterprise of projects oversold for efficiency and automation can you hear a hundred folks say oh

my dumb competitor promised this they lied whatever whoever is coming back because they lied they're coming back but they haven't come back they haven't actually boomeranged back God whether you believe in this stuff or not whether you think it's three years out or whether you think we're already here whatever you do calmly sit down with your team and make sure you have ai feature parody and a related conversation that's tough and I've done this with a bunch of startups that I've worked in invested in a tough first of all a lot of folks don't want

to do this they want to complain about how dumb it is and their competitors kill them once you're self-aware about this and you put your three top three competitors on the board and you talk about what is AI parody in our space even mean okay and you're honest about it and you look at it and sometimes when they're honest about it and you put it up an issue you don't really the tough thing for some folks is they don't have the right CTO they don't have the right CTO today the CTO is still struggling they're

trying to understand how this works I see this too often and you got to and a general I think to win in this world this Comm of world you got to hire hackers you got to hire tinkerers you got to find folks that uh love working on the bleeding edge of Technology if you're CTO by today isn't sure how to doesn't isn't sure how to integrate AI into your product ask yourself if you need a new CTO it doesn't mean let get rid of them but your competitiveness I think is going to going to continue

to Decay and accelerate I've seen a number I think I've built enough software I can't really write any code today but I have built a product that's done a couple hundred million of Revenue I've done some good Investments I think I know the difference between a great CTO and a merely good CTO and I see too many good CTO that can't make this shift they can't it's too expensive I can't hire any AI Engineers I can't it's to I can't afford a Zer open I can't I believe that you can't I believe you can't so

find someone that can find someone that can too many can't you got to find a way you got to be honest if you're at parody and then you got to be honest if the team can make this generational shift a lot the best ones all can they love it we all watch like darash from HubSpot tinkering on AI before we even understood what AI was he's a great CTO he's a hacker that's what hackers do they go home at night and they're excited about the best technology and they almost do too much it's almost annoying

sometimes that's a nice to have we're in a generation where it's a must have okay this one's so important I think we as a group we know this a little better than a couple months ago but it's still the social media and VCS are sending all the wrong messages on profitability all the I can't tell you this is a pretty good most folks here are either doing okay or believe they will do okay like I haven't but in the broad world a lot of folks that are struggling think all that matters is being profitable all

that matters is being profitable you can't go public on 10% growth you can't get acquired for any reasonable amount of money on 10% growth hoay that you're profitable but that's not the goal it may or may not be part of your journey if you're if you have no Capital it has been part of your journey since day one so if you're C forget about bootstrapped or not if you're Capital free you have been at least break even by hooker Mike Rook since day one but what whatever it is there's so many good analysis I put

them together on saster that everyone from redpoint to besser to maritech have all crunched the public numbers and they've summarized this for the public companies for public companies growth is still worth twice as much as profitability for startups it's probably four to 10 times and for startups what really matters is this next line is hoay if you're profitable but you've got to still hit T2 D2 or better triple double to get funded tripling from look some VCS will cut you a little slack but the goal of venture investing is to IPO within a decade and

to IPO today you've got to be doing at least 200 million growing at least 40% so build your own if you don't believe me build your own spreadsheet what is it taking 10 years to get to 200 million growing 40% you probably have to be tripling at a million to three going from 3 to 9 and then 9 to 18 and 18 to 36 and most startup don't do this in our opener em I had emergence slic some of their data it's less than 10% of venture back startups that hit this not 10% of all

startups only 10% of folks that rate SE rounds from the top VCS even maintain this pace right and if you don't find way your Founders you will not fail if you're not triple double but it's still the bar for venture capitalist actually the Venture Capital just G hard not only do you have to triple triple double but you can't burn 700 million while you're doing it you have to do you have to do it all you have to grow just as fast as 2021 and you have to burn less but there is no profitability is

not the end state for investment and it's not the end state for an exit it's not the end State enough padding everyone on the back for being profitable so it's great if you need if you have if look don't run out of money that's the worst thing but being profitable is not the end state for a startup it may be for a mom and pop um it may be for whatever the heck a lifestyle business is but I don't think people are coming together here and giving up two days of their time to have a

no- growth business so don't confuse him seven we hit seven we hit so I'll just spend 30 seconds on it but it's worth just breaking out so it rattles in your brain I don't understand I understand a lot of things in saster the one thing I'm more confused about is where nonfounders are in the world today there's so many people that are just broken and bitter and fractional and angry and I don't really want to hang out with them but I I hear you like I I hear you and I know 2021 seemed weird and

I know the transition from 2021 to 2023 for a lot of folks was brutal it was brutal for folks that were new to the market and it was brutal to folks because the world of 2021 lasted almost two years it lasted so long that we all thought that was The New Normal the Thousand unicorns right I remember meeting with a top FEC that you all have heard of and I was with him in 2021 and he's you should invest in my these three companies I just did at the seed stage okay I was like this

one will be unicorn in about 14 months this one will be a unicorn in about two years this one might be unicorn this year that's the way VC's thought in 2020 like they'll all be unicorns they'll all be unicorns and so they all raised insane capital and we're just struggling in many ways to get into this world but look if nothing else you got I know it's hard you got to hire folks that want to I don't even watch basketball anymore since March 2020 but you got to hire folks that want to play the game

48 minutes you can't hire folks with three jobs or want to be fractional or want to run two businesses on the side or want to see how it goes or think they can be a fractional C for seven companies at the same time it's too hard out there you can't hire the broken the bitter and the fractional even if it's all you can find even if their resume is great even if someone else recommends you there's too many pissed off people there's too many people who are just broken by the the change the Velo it's

just the velocity of change look at Zoom isn't it just a proxy for all of us zoom in one year went from 1 to four billion in revenue from whatever mid 2020 to 21 went from 1 to 4 billion from 2020 to 2021 anyone know what zoom's revenue is today 4 billion so one year quadrupled and the next three years it essentially grew zero uh Eric Juan is one of the greatest generational founders of Our Generation but that's hard on anybody isn't it you learned how to go from one to four land and then you

have to live in forland for no growth for three years you can't hire those people you can't hire those people you don't need those people you don't need Dash olist and startups and the broken in the bidder okay the last ones are really quick and then we'll take some questions until they kick us out but this one is like one of the earliest saster posts of all time I don't think this has changed but I this is still a top three mistake in executive hiring today just don't hire for the logo we all succumb to

this my God I I got someone from notion I got someone from insiders here I got someone from MailChimp and I'm doing email marketing I got someone MailChimp I don't know what it's doing today but when it got bought by into it was doing a billion in AR that's not a startup different set of Cycles different set of skills we all keep making this mistake again I can't tell you how many candidates I get referred to this is the best person at toast ever someone recently a Founder that I just love a first-time founder told

me that this was like the greatest person at HubSpot and there's some good deal size an allergies and was there really early cool so I talked to him when was there really early 200 million in AR was there really early really saw the early days at HubSpot 100 million in AR I'm pretty sure that was like a year after the IPO so that's early in his mind everyone loves this guy but we all keep making the mistake so look here's my simple cheat code I and every time a Founder makes a logo hire a mistake

and they we talk what happened with Bill is just to big company to whatever and I always ask him this simple question okay put your hand under LinkedIn cover that job at or data dog or Zoom info or wherever every company look would you have still hired them if they didn't work there and the answer from the founder is always no it's they don't hesitate they don't Maybe no I would not have hired them if they didn't work at that company I look up to that's in our industry 100% so whatever you do this is

just the and for yourself challenge people on your team challenge your co-founder if you fall in love with someone in any part because of that logo literally if you want this is just for fun print it out if you can find a printer take a black marker and black out the Linked In And for fun hand around and say would you still hire them and if you hear that hesitation they're going to be gone there's no point in hiring someone that's not going to be there in six months they're going to be gone okay the

last one I think we hit so I'll just reinforce it guys don't look for instant Roi it doesn't exist the instant Roi here's the real issue not only have people retreated cut their marketing expense to almost nothing the bigger fool errand is everyone is spending time in free marketing to make up for it they're like listen we're not going to do any more booths we're not going to do any more joint marketing we're not going to do any more spend but you know what we'll do let's do a podcast let's spend 3 months planning a

podcast let's build a studio let's get an agency let's get the same guests that are on every other podcast but they won't come so let's get the folks selling courses and horses and tools let's get the the fractional people that will show up to anything and then three months later you have one podcast and who's going to download it nobody and I'm not saying that actually that alone that's a bad idea do do a 100 of them May build to something but the think about the amount of soft cost in what I just described the

amount of time and energy from your expensive six figure employees building one podcast you think this was a joke I literally just talked with a CMO this is the only thing you did in four months is accomodate 200 million Revenue only thing he did in two months okay free marketing is great but anything other than viral usually has a high soft cost so it's not magical either so free is not magical mag we heard some talks say magically bold on a plg motion to a sales Le thing is not an instant solution to marketing it's

I see so many folks they're struggling what are you going to do our product's $60,000 a year or we're going to go plg what does that mean we're not quite sure but it's going to be self-served it's going to have a free trial it'll sell itself if it was going to sell itself it would already be selling itself going down Market plg is a huge commitment if you don't start there it takes years it takes much better onboarding it takes totally different sales and marketing skills it has a different set of competitors if you're 100%

committed to doing it do it but it ain't a quick fix it ain't a quick fix adding plg to SLG so this stuff all takes time do the stuff that takes longer building pipeline takes times you got to do it referrals takes times you got to do it instant Roi is a recipe for not growing okay the very last one I don't have all the answers here but I do want to share it and I I've had some good conversations on it here so I know people are aligned with me here I think there is

an operational tragedy in SAS that has happened in the last 18 months a tragedy which is that as parts of the market came under stress as growth got harder there's a couple things we did we all raised prices without earning we sent an email to your customer thank you very much prices are up 20% everyone did it slacked at its first price increase in history 18 months ago I did a a blog post every single leader in SAS that had a price increase did it HubSpot did two after basically having the same pricing for a

decade everyone raised prices without earning it it's one thing to launch a new edition it's one thing to launch an Enterprise Edition with different functionality and different Integrations and say look our regular ones still 20 bucks a month but our new Global one's $40 a month with all the security Integrations the market doesn't mind that but raise prices three times for the same product fo me Thrice what's the expression fo me once fo me twice fo me Thrice even if you don't churn you really start looking for another vendor and you certainly don't want to

buy more things from a vendor that ripped you off and we're seeing a couple things and I want to tie into this what we're seeing now across a lot of companies and Salesforce just talked about this in this their an call people just don't want they're not as receptive to a cross sell to buying more products and more solutions when you rip them off in the core one if your product is cheap relative to value and it's it's great if it's cheap and great and and someone from the company calls you up and says hey

we have another product we we're launching it's another product you want to take a look I'm excited you only have a handful of vendors in your stack that are great cheap and trusted I'm going to take a look at it right everyone it's canva is so cheap everyone at saster has their own license if someone called me and wanted to sell me something else from canva I'm all in okay it's a great whatever it is it's a great deal I can give you other examples that are great deals I ain't going to take a call

from our Salesforce rep we have free licensed some from sales for think that cut charges like $20,000 a year and raise prices every year like we're stuck on it for a little while but I certainly ain't buying anything else from I certainly ain't buying anything else from you so we're under stress and what we have done the last 18 to 24 months is we have tried to M push our existing customers to make up for the gap on new customers we've tried to do it we talked when we started this day on uipath that crashed

epic company Daniel dyes was here last year he's back as generational company in Automation and going to AI last quarter uipath it's growth crash but it still grew 20 something per but it had no net new customers it started the quarter with the same number of customers then even uipath how' they do it they drove their five their customers up to $5 million a deal and more oh done that's great done that's great but squeezing your customers hard is tough we have a vendor here who will go nameless that we've worked with for years coming

into SAS Europa they hired a new C and the C called us just right we're already stuck when we're doing this we got to come here right we got to come to London we've already we've sold a few tickets few booths and this new C comes in and says oh we're tripling your prices no notice no email ahead of time just get something we're tripling why are you tripling your prices because it's too cheap maybe but like how about talking about it over the eight years we've worked together and just got really belligerent we just

we then just see you later see you later now look we did end up paying more money for this product but we certainly won't buy anything else from them we asked that they take us down as a case study on the website we've given them dozens of customers we won't give them another so this is all over the place you can hear stories of public companies threatening customers you can hear stories of public companies threatening to sue vendors if they keep their dat after turning up we never used to hear this we used thought you

owned your own data now we're finding out the terms of conditions of a lot of websites say know what you know what the vendor owns your data so an aggressive sales rep will call you up and threaten you we see too much of this be attuned to this as Founders but I think the worst of all of this what has made it the worst is when we've all decided that customer success should be part of sales the worst of all of these Trends because what we've done is weaponized customer success we've taken the one person

in the company who if they're actually good and not lazy and do any work and show up their only job is to keep the customer that's what classic CS job is grr retention don't lose your customers you don't have to worry about overselling them you don't have to worry about this just keep your logos and you'll get your 20 or 30k annual bonus and you'll be happy and get your MPS up and your CS but just keep your logos as soon as everyone moves CS into sales and they do this because of stress because they

wanted to monetize the base they wanted to monetize it this story I just told you about the price increase I don't think the C should have been working on us right that should have been CS or someone else making us happy but everyone leaned into their base and so whose job is it to make your customers 100% happy 40 hours a week ask yourself this if you've weaponized CS is there at least for your top 20 or 30% of your base is there anyone who day and night all their job is to make those 50k

80k 100K 200k 300K customers is there someone who all they do is worry about about that and nothing else or do they now think is there now job nrr my job is to turn my $2 million book into 2.8 sounds great to the cro is that right for the company is that right for the customer it creates aberant Behavior it creates abant Behavior I'll give you one last story I'll give you a last story and then we'll take some questions we were on we did a zoom the other day with the vendor we use been

using them for years head of customers success insisted that I be on it I I don't need to be on it we got a good team over there they can be on it thanks insisted that I'd be on the zoom get in and they wanted to sell us another product that we it was like twice the price but then the vpcs made a mistake she the goal was that's why they insisted you don't need me Amilia can make the decision she owns the budget but they wanted me on and the real goal was to get

to buy it and then she made the mistake of asking what my feedback was and don't ask I've built software I can see the bugs I can see the issues I can see the problem I said to you really want to know what I think because I'm I'm honest and I've done references for you and I've given you customers but you really want to know and I went your product doesn't scale it's gone down on us multiple times here's all the issues and just ended the zoom just turned off the zoom now at first I

thought it was because they didn't want the feedback which was 2024 but the real truth is there was no money in it for them right it was clear that the upsell wasn't coming it wasn't worth their time move on is this the experience you with a logo customer is it who makes your customers happy if customer success has rolled into sales I don't know what to do but churn zero did a survey gainsight did a survey they're both on saster I'm sure hook would give you similar data the majority of SAS teams have moved CS

into sales the majority so even though I hate it it's possible you hate it I feel like the ship has sailed and so we may need to just make sure somebody's making our big customers happy so top 10 thanks everybody