Sahil Mansuri is the CEO of Bravado, the world’s largest online sales community. Sahil is passionate about sales, and his experience dates all the way back to 2008, working for Obama’s presidential campaign. During his time at Glassdoor, Sahil was able to close some incredible accounts, including Facebook, Google, Microsoft, and Amazon. In today’s podcast, we talk about why sales is a crucial part of any business and how to continue selling successfully through a recession. We get super-specific on building a conservative plan for the near future and cover everything from where to place your best salespeople to restructuring comp plans. The episode is full of great advice about how to shift with this market, improve agility, and perhaps grow an even stronger business with happier customers.
Where to find Sahil Mansuri:
• Twitter: https://twitter.com/svmansuri
• LinkedIn: https://www.linkedin.com/in/sahilmansuri/
• Email: email@example.com
Where to find Lenny:
• Newsletter: https://www.lennysnewsletter.com
• Twitter: https://twitter.com/lennysan
• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/
Thank you to our wonderful sponsors for making this episode possible:
• Flatfile: https://www.flatfile.com/lenny
• Merge: http://merge.dev/lenny
• Miro: https://miro.com/lenny
• Bravado: https://bravado.co/
• Stumbling on Happiness: https://www.amazon.com/Stumbling-Happiness-Daniel-Gilbert/dp/1400077427
• All-In podcast: https://www.allinpodcast.co/
• How I Built This podcast: https://www.npr.org/series/490248027/how-i-built-this
• The Blacklist on Netflix: https://www.netflix.com/title/70281312
• The Newsroom on Hulu: https://www.hulu.com/series/the-newsroom-3d51e070-e77d-4294-ac83-cab80d3f94dd
• The West Wing on HBO Max: https://www.hbomax.com/series/urn:hbo:series:GX5nwgQDNJZ6aoQEAAAHJ
• Jeopardy!: https://www.jeopardy.com/watch
• Frasier on Hulu: https://www.hulu.com/series/frasier-0cb9b63b-de82-4751-99c9-1cb12118ab9d
• Slack: https://slack.com/
• Zoom: https://zoom.us/
• Grain: https://grain.com/
In this episode, we cover:
(04:19) Sahil’s background
(08:26) What is Bravado?
(10:27) How to shift your sales strategy to meet the market
(12:00) How to set a conservative plan that still allows you to lean in when growth is possible
(19:06) Why the downturn in tech may not be over anytime soon
(21:34) How Bravado gets its data from users and creates global benchmarks
(23:04) Why SAAS has an outdated comp structure
(33:23) Why companies are resistant to restructuring comp plans
(37:18) The problem with hypergrowth in today’s market
(41:18) Why it’s time to shift into a retention-based strategy
(43:28) Why your best sales staff should transition to post-sales for customer retention
(51:20) What are warm intros, and how can existing customers help you get new ones?
(59:30) How Sahil was able to get Facebook’s account at Glassdoor
(1:08:08) Why CEOs are actually salespeople
(1:12:50) How to survive a downturn
(1:19:44) Lightning round
Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email firstname.lastname@example.org.
Get full access to Lenny's Newsletter at www.lennysnewsletter.com/subscribe
Sahil Mansuri (00:00:00):
It's hard to plan what you should do for all of 2023. I think the advice that most founders are getting from their boards is when you have limited visibility, you have to plan in the most conservative way. On the one hand, of course that's true, you have to be conservative. But on the other hand, you don't want to be unreasonably conservative because you don't want to be floundering from like, oh, we're screwed to everything's better, to we're screwed, everything's better.
So the way I think about setting up a plan when you have limited visibility and some major headwinds is setting up a really conservative plan and then having milestones, short term milestones that unlock the ability to lean into growth and spend based on hitting those targets.
Welcome to Lenny's Podcast. I'm Lenny, and my aim here is to help you get better at the craft of building and growing products. Today my guest is Sahil Mansuri. Sahil is the CEO and founder of Bravado, which has built the world's largest online sales community of over 300,000 salespeople, and they're now building SaaS products for salespeople. Sahil has one of the most unique perspectives on the art and skill of sales, partly because of the community and the company that he runs, and partly because he was a longtime salesperson himself.
As you'll hear in this episode, he has closed some incredible deals, including a wild story about cold emailing Sheryl Sandberg at Facebook and what that led to. In this episode, we focus on what founders should change and how they do sales during this market downturn, including how you should approach sales quotas, how you should rethink the way you do comp plans for salespeople, how you do forecasting, also why you should refocus on retention and your existing customers, how to improve your sales technique in general no matter what role you're in.
As someone without a lot of depth in sales, I always find it fascinating to learn how to get better at sales. This episode has something for everyone. With that, I bring you Sahil Mansuri. Hey, Ashley, head of marketing and Flatfile. How many B2B SaaS companies would you estimate need to import CSV files from their customers?
At least 40%.
How many of them screw that up? What happens when they do?
Well, based on our data, about a third of people will consider switching to another company after just one bad experience during onboarding. So if your CSV importer doesn't work right, which is super common, considering customer files are chock full of unexpected data and formatting, they'll leave.
I am 0% surprised to hear that. I've consistently seen that improving onboarding is one of the highest leverage opportunities for both signup conversion and increasing longterm retention. Getting people to your aha moment more quickly and reliably is so incredibly important.
Totally. It's incredible to see how our customers like Square, Spotify and Zora are able to grow their businesses on top of Flatfile, this because flawless data onboarding acts like a catalyst to get them and their customers where they need to go faster.
If you'd like to learn more or get started, check out Flatfile at flatfile.com/lenny. This episode is brought to you by Merge. Every product manager knows the pain of slowing product velocity when developers struggle to build and maintain integrations with other platforms. Merge's unified API can remove this blocker from your roadmap. With one API, your team can add over 150 HR, ATS, accounting, ticketing and CRM integrations right into your product. You can get your first integration into production in a matter of days and save countless weeks building custom integrations, letting you get back to building your core product.
Merge's integrations speed up the product development process for companies like Ramp, Drada and many other fast growing and established companies, allowing them to test their features at scale without having to worry about a never ending integrations roadmap. Save your engineers countless hours and expedite your sales cycle by making integration offerings your competitive advantage with Merge. Visit merge.dev/lenny to get started and integrate up to five customers for free. Sahil, welcome to the podcast.
Sahil Mansuri (00:04:21):
Thanks Lenny. Thanks for having me.
So we're going to be talking about sales and in particular what you should be adjusting in your company during these very turbulent market conditions. But I thought first it'd be helpful if you just gave a little background on yourself to kind of give folks a sense of why you have such unique insights into the sales world. So maybe just talk about a little bit of your background and then what you do now, the company that you run now.
Sahil Mansuri (00:04:46):
I've spent my whole career in sales. I started out in sales when I was in college. I worked on the Obama campaign. We didn't call it sales, right? We called it turning out the votes or street teamwork or field ops or phone banking, but it was sales. We were just selling the dream, literally the American dream as it were. So I've been in some sort of a role where my primary responsibility was to cold call, send emails, have conversations, objection handle, and try to get someone to sign a contract for my entire career.
I started selling in September of 2008 was my first month with a quota. So I started selling in the middle of the last financial crisis. In 2009, the company that I used to do sales for, which is called Meltwater, this company, it's a pretty crazy story. It's one of the few companies that has made it to $100 million in recurring revenue without a drop of venture funding. It's a Norwegian company actually.
If I remember correctly, don't quote me on the exact numbers here, but the company had basically gone 10 million to 30 million to 50 million to 70 million, and then in 2009, they went from 70 million to 69 million. It was the first year that they hadn't not only increased revenue, but revenue had gone down. In that year, in 2009, I broke the company record for the most sales by any individual person in one year in the history of the company. I say that not out of hubris or out of pride, I say that because I've literally sold in a downturn. In the middle of a recession, I have been an account executive selling, carrying a quota and have been successful in doing it.
Then went on to be a sales leader at a bunch of different places, probably most notably at Glassdoor, where I joined as one of the first 20, 25 employees. Was responsible for enterprise sales there. Personally closed Facebook, Google, Amazon, Microsoft, Ford, Visa, Bank of America, JP Morgan, Walmart. At its peak, at one point I think Glassdoor had about 100 of the Fortune 500 customers and I'd sold about 60 of them myself. I've done a lot of selling in my career, also a decent amount of sales management and sales leadership.
But really my forte is selling. I love to sell. I love to talk to customers. I love to train salespeople. I've been a VP of sales and CRO in a couple different places. Then for the last five years I've been building a community for salespeople that's called Bravado. Bravado is a network of about 300,000 B2B tech sales. That's about 50,000 VPs of sales and CROs, about 150,000 account executives, another like 40 to 50,000 SDRs. Then the rest of it are kind of customer success, sales engineers, sales ops, sales enablement, et cetera.
So it's a network that purely focuses on sales, and much akin to your business, I suppose, marries community learning, upskilling, recruiting as this one place that a salesperson can go in order to beat the odds, be successful in their career, find a great job, or hit and crush quota in their role.
Awesome. I think that gives a clear picture of why you have such unique insights. I don't know if there's anyone that has such a broad access to so many salespeople and what they're doing, what they're thinking about. The core part of the Bravado product, just to make it even clear, is a community or people ask questions, help each other through sales issues, things like that, right?
Sahil Mansuri (00:08:41):
Yeah. So if you're familiar with Stack Overflow and what that network and community means to engineering, Bravado has a product that's affectionately known as the War Room, which does the same thing. So you have 50,000 companies, sales teams that are on Bravado. We get a realtime pulse of which companies are hitting quota, which ones are missing quota, which sales reps are closing deals with which organizations, which industries are doing better or worse.
So we do get a really interesting perspective within the world of B2B tech sales, to be clear, a really interesting perspective on what's happening in terms of companies and revenue and forecast and quota, which gives us hopefully an opportunity to serve those members and the general tech community at large in terms of how they can beat the odds, especially as we're back to that 2008 crunch that we saw then as well.
Awesome. Just to put this out there, I'm a very small investor in Bravado. I'm just a fan of these kinds of companies, community led SaaS tooling. I was really impressed with the way you're building and the way you're approaching it. Also, I don't have a lot of depth in sales, and so I loved this opportunity to learn about how sales works by participating. So thank you for letting me join the journey of Bravado. It's a really unique company and I'm excited to see where it all goes.
So with this podcast, we were planning to talk about sales. Initially, it was going to be how to get better at sales, how to be a better salesperson. But you had this great suggestion that we instead focus more specifically on what founders should change in the coming year knowing the conditions of the market and how things are turbulent and how people are spending less and things like that. So we're going to talk about five things that you can do right now to change the way your sales process works starting now for the next year. The idea is once you listen to this conversation, you can go and do these things immediately with your team. So that sound good?
Sahil Mansuri (00:10:41):
Yeah, it sounds great. I mean, I think, inherent in this conversation will be things that you can do to be better at sales, but I think the way in which you sell has to be different based on market condition. So if we had done this podcast eight months ago or 18 months ago or 28 months ago or 38 months ago, I think we would've had one set of conversation. We would've talked about growing top line revenue. We would've talked about how to get your first 20 customers. We would've talked about how to build and scale a sales team. We would've talked about setting quotas and whatnot.
I think that today, the market has shifted because we know that the cost of capital has gone up. We know that funding has dried up. We know that investors today are only interested in companies that have strong unit economics and have high retention rates. Cold prospecting goes down in favor of cross-selling and upselling your existing customer base because it's hard to break into new accounts when companies have budget freezes and hiring freezes and layoffs, and everyone is watching really closely the capital outflow of their business. So your sale strategy has to fundamentally change in order to meet the moment and meet the market to where it is.
Great context setting. You touched on a few of the things we're going to talk about, so I'm excited to get into it. The first topic I wanted to chat about is forecasting and quotas. You have some advice on how founders should be thinking about adjusting their forecast plans and their quotas for next year. Can you talk about that?
Sahil Mansuri (00:12:18):
Yeah, so let's start with some data and then we'll talk about why this matters. So on Bravado, as I mentioned, we have 300,000 members, but only about 200,000 of them. So about 65% of the network uses a product called the Seller Portfolio. The Seller Portfolio is a realtime tracker of how you and your sales team are performing relative to quota. You can kind of think of it like mint.com, but instead of being for personal finance, it's for sales. Based on that, we're able to get a realtime perspective on which companies in specific, and then overall which industries and in which sectors are at or above or below quota.
So I'll share some stats with you. So in Q3 of this year, so I guess as of last month, in Q3 of this year, 63% of sales reps missed quota, 63%. That's up from 54% in Q2 and 46% in Q1. So you've basically got 30% more of the sales team missing quota today than you did literally just six months ago. If you broaden that out to a team wide structure, 76% of companies missed their Q3 target. 76% of companies missed their Q3 target. That's up from 59% in Q2 and 51% in Q1. So you actually have 33% more companies that are missing target.
[NEW_PARAGRAPH]Then at this point, it's gone from being like the occasional company is struggling to pretty much every tech company is struggling. We would predict, based on the data that we're seeing, that over 80% of companies will miss their Q4 goals. So in a world in which the vast majority of sales reps are missing quota and the even larger vast majority of companies are missing quota and their forecast, that on the one hand explains why you're seeing this bunch of layoffs.
On the other hand though, it raises the question of what do I do for next year? On the one hand, you don't want to bring down targets too significantly because it's going to raise a lot of red flags in terms of spend and burn and probably meet a lot of really painful decision. On the other hand, it's really hard to have visibility into what the market's going to look like six months, I mean, heck, even like six weeks from now. Things are changing on a realtime basis.
Something interesting that we saw is that we have quarterly tracking, but we also have monthly tracking. So something interesting we saw is that from November until March of last year, companies were basically blowing out their quota, sales reps were blowing out their quota. All of a sudden everything came to a screeching halt in April, and April, May and June were really tough times. You saw that outwardly in the market in terms of layoffs and hiring freezes and such. But we saw it on a realtime basis in terms of percentage to quota and companies missing their target.
What was interesting is that a bunch of companies then revised down their forecast for the rest of the year, but then companies started beating those forecasts in July, August, September. So for a moment there, it actually looked like we might be out of the worst of it, and then came obviously a much maligned double dip recession, which then in October, November, all of a sudden everyone just started missing. Many of your listeners, I would imagine, work at VC backed SaaS companies, so they can, in the comments or whatnot, speak about whether this is also true for them.
But I would imagine that for most of companies going into the middle to end of September, they probably felt pretty good. They actually thought like, "Oh, maybe we can actually squeak by in Q3. Maybe we can revise up forecast in Q4. Maybe we can hire into next year and we can go back to growing the way we were for the previous 10 years." Then October was just a bloodbath. On companies that do monthly quotas, 85% of sales reps missed quota in October for their monthly number. I think it's going to be even higher in November based on what we're seeing.
So again, I share all this information with you to just kind of set the stage on what's happening realtime in the market. So given that September felt good, but today we're totally screwed, it's hard to plan what you should do for all of 2023. I think the advice that most founders are getting from their boards is when you have limited visibility, you have to plan in the most conservative way. On the one hand, of course that's true. You have to be conservative. But on the other hand, you don't want to be unreasonably conservative because you don't want to be floundering from like, oh, we're screwed to everything's better, to we're screwed, everything's better.
So the way I think about setting up a plan when you have limited visibility and some major headwinds is setting up a really conservative plan and then having milestones, short term milestones that unlock the ability to lean into growth and spend based on hitting those targets. So here's an example. Let's say that you did $10 million in revenue this year and next year you have no idea what that's going to look like. Maybe you say, "Okay, let's plan like we're going to be down to 9 million. We're going to lose 10% of revenue next year despite our best efforts because the market's going to be really tough."
So that would mean that in Q1 you need to hit 2.5 million in revenue. Let's say in Q1, if we hit 2.5, then we should revise up our targets for the rest of the year and we can unlock this additional budget to kind of spend off of. If we hit below 2, we should revise down our number. So kind of being comfortable with regularly reforecasting. Forecasting, you can't just forecast a quarter out every time. Obviously that's a tough way to run a business. So you got to forecast a year, but then set milestones, checkpoints and kind of make predetermined decisions that allow you to avoid the bias of then walking into Q1 and being like, "Oh, we missed in Q1, but no, no, we're really going to hit it in Q2."
You got to set the targets upfront because as founders, we tend to have a bias towards optimism. That's generally how founders operate. In today's market, that's more of a disadvantage than an advantage. So my suggestion is to really think about forecasting conservatively, setting up checkpoints and milestones around what future success may or may not look like. If you hit those goals, then decelerating or accelerating into it depending upon what you get there, and coming to an agreement with your board, with your sales team, with your sales leadership in advance so that there's no debate about what to do when you actually get there.
That is awesome advice. As a PM, it makes me think a little bit about moving to an agile sprint sort of system versus this long term waterfall oriented planning process. Have you seen this need happen in the past? Is this the first time we need to plan to reforecast throughout the year? Or have you been through periods where this is just the way people operate when times are super uncertain?
Sahil Mansuri (00:19:28):
First of all, I think the vast majority of CEOs and sales leaders haven't been through a period of dramatic uncertainty in their careers. I mean, there are obviously people who have been in business for more than 15 years and who have been through other downturns. But unless you were a sales leader, a CEO, an executive in 2008, which I would imagine that not very many people were or certainly not everyone was, then you haven't seen anything like this. People try to analogize it to COVID, but I think that that's actually not a good analog for this.
The reason why is because COVID was an external factor versus this is actually an internal issue, which is to say that there are actually industries that are doing much better these days except for tech. Tech is getting crushed, right? In COVID, everyone's getting crushed. So it didn't matter if you owned a yoga studio or gas pump or whatever, a hotel. There was nothing that was working well unless I guess you owned Amazon Fresh or something. There were very few businesses that were doing better as a result of COVID. But there's a bunch of companies that aren't doing that bad. I mean, if you listen to other podcasts, you've probably seen that tech is the one that is getting the most hammered in this, although I think in the last two weeks, crypto has caught up pretty quickly.
But it's really kind of tech, right? So when you see a slowdown in tech that is disproportionate, you have to assume that it may last for a much longer period of time than you imagine. I think that given the lack of visibility and the amount of volatility, I think it is a unique situation for most companies, for most leaders. I think that the only response to which is to try to get really comfortable with being wrong and adding new data in in order to make decisions regularly without the fear of coming across as not knowing what you're doing.
Things seem to have been crazy for a long time. It's interesting that this is the first year where you're finding that companies have to do this. Before we get to the next topic, I wanted to come back to the stats that you had real quick. Can you talk again about how you get those stats? Is this like a salesperson plugs into their system somehow in exchange for getting access to the benchmarking? How does that work because that's very cool?
Sahil Mansuri (00:21:49):
Yeah, exactly. That's right. It's a gift to get model. So the way it works is that you enter your stats, and in doing so, you get global benchmarks of how you're doing versus other reps or other companies. So there's a premium for being accurate here because otherwise you don't actually get a real sense of how you're doing versus others. So there's an incentive structure that's built in to be really precise. Then that information feeds into our kind of global leaderboard where we are able to slice and dice and say, "Okay, of companies that are headquartered in San Francisco, here's how your company's doing. Of sales reps that sell to CMOs, here's how you're doing. Of reps who carried a quota of between 500, 700K this quarter, here's how you rank." So we do global benchmarking for sales reps and sales teams and we share that information for free to anyone who is willing to participate in the ecosystem.
That is very cool. I had no idea that was something you did. How do folks join that if they want to join up?
Sahil Mansuri (00:22:49):
Simple, everything's available for free. Just come to bravado.co and we have something called a Seller Portfolio. Go ahead and build one of those and then enter the information and then you'll start to receive the stats as they come out each quarter.
Sweet. Okay, second topic, comp plans. You have some advice for how teams should think about comp plans for their sales people? What's your advice?
Sahil Mansuri (00:23:09):
So comp plans are, or compensation plans for sales, are very different than they are for most other profession. So in most professions, yours and product management, you have a base salary that encompasses the vast majority of your cash compensation. You then often have bonuses that are either based on company or sometimes personal milestone, which are often paid out end of quarter, end of year. Then you'll have an equity grant that you vest over the course of time. That's not how it works in sales.
So the way it works in sales is that you have what's known as a base and then what's known as an OET. An OTE or on target earnings is how much you make if you hit quota. The most common ratio that you see in SaaS is what's known as a 50-50 split. So let's just use some round numbers. Let's say that your OTE is $200,000. What that means is that your base salary is actually only $100,000. So unlike in most other professions, sales reps make very little base salary, but their OTEs are often higher than in most other professions because they're variable, so the second $100,000 you unlock through your performance on the sales team.
Again, I'm going to use the most common examples for this, and every combines different, et cetera, but what's really common is if you have a 200K OTE, 100K base, 100K commission, then your quota will be $1 million. So the ratio between your OTE and your quota is typically five to one. So your quota is usually 5X. This comes from this idea that your cost for a sales rep fully loaded should be about 20% so you can afford to pay 20% of your salary to a sales rep. So let's talk about what that all means.
So what that means is that you as a salesperson have to sell $1 million of software in order to make $200,000 of money. But that $1 million of software is only around new business. The vast majority of account executives are only responsible for new business, which means top line revenue growth. So let's pick two theoretical examples. Okay, let's say they're sales rep A and sales rep B, and they both have the same quota, same OTE, okay? We're selling for the same product, same sales team. Sales rep A closes $1.5 million in 2022. Just for easy math, let's say that's 15 100K deals. So product is 100K. They sold us 15 deals a year. They would close $1.5 million.
That means that they would hit 150% of quota. When that happens, when you exceed your quota, you hit in sales what are known as accelerators. So it's not like if you hit 1 million, you make 200, but if you hit 1.2 million, you just make an extra on that 200K. You actually often make extra money for exceeding your quota. The more you exceed your quota, the more money you make. So you would imagine that if someone sold 1.5 million, they wouldn't make 300K, which would be 20% cost to sale. They might make 400K. That's pretty common in sales.
So this person who closed $1.5 million in business from 15 deals ends up making $400,000 and they get taken on a free trip to Cabo because they made President's Club and they're put on the leader board and the CEO of the company gives them an award at the end of the year and they are heralded as the pinnacle of all things that are sales. The VP of sales says, "Wow, I can't wait to clone 10 of you." That's how sales teams are set up, right?
Then you have sales rep B. Sales rep B only closes 12 deals for 1.2 million. So they still exceed quota, but they only exceed quota by 20%, not 50%. That sales rep ends up making let's say 250K. So they make $150,000 less money. They don't get to go on the trip to Cabo. They don't get the award at the end of the year. They're not the ones that are celebrated or championed and they're seen as a good performer but not as good as team player A. That all makes a lot of sense in a world in which companies are really focused on top line growth.
Nothing is more important than the amount of ARR you're making and how fast you're growing and investors are basically demanding that you go 3, 2, 2, 2, which is common parlance for if you make 5 million this year, you should make 15 million next year, you should make 45 million the year after, and then you can slow down to going 90 then 180. This is how VCs often think about funding SaaS companies. They look for this 3, 3, 2, 2 sort of multiple growth on ARR, new business ARR. That's how the world used to function until six months ago.
Then six months ago, all of a sudden the music stopped and capital got expensive and everybody started being like, "Whoa, wait a minute. We should think about things like net dollar retention and we should think about what renewal rates look like and we should think about how efficient you are at acquiring customers." All of a sudden, profitability, efficiency, retention came into focus as everybody realized that unprofitable growth was no longer going to be rewarded because you couldn't just keep spending in order to acquire customers. Acquiring new customers was going to get harder so retaining the ones you had and making sure they were happy was actually far more important.
So let's go back to our example. So team player player A who closed 15 deals for 1.5 million, poster child for the company, got $400,000. Let's say out of their 15 customers, 10 of them churn next year and only five of them actually end up renewing. How much does that affect player A's compensation, their performance, their celebration, et cetera? Doesn't affect them at all. Make no difference. 99% of SaaS companies are set up this way, right? Every SaaS company of, with very small exceptions, HubSpot, monday.com, there's a handful of them, except for very few SaaS companies, no difference to the salesperson's performance. It's seen as a failure of customer success. Other people get blamed for it. Sales rep, no change in their comp work or their success.
Meanwhile, sales rep B who closed fewer deals, 12 of them. Let's say all 12 renew, and not only do all 12 renew, but let's say that three of them actually are so happy with the product and service that they're willing to be featured on your website as the folks that you advertise. Let's say six of them are actually willing to be references. So they help you close even more business by getting on the phone with prospective customers and are willing to actually advocate for your product. Let's say that not only do they renew, but four of them actually upsell because they're so happy they end up spending more and they sign multi-year contracts and whatnot.
How much did that affect sales rep B's performance? Do we go back and revise and say, "Well, wait a minute. Actually sales rep B's customers were way better and actually we should probably have rewarded sales rep B because they actually had done the homework of finding the right clients instead of just shoving product down people's throats." No, none of that happens. Again, that kind of made sense up until six months ago, but it makes no sense today. So sales comp plans are stuck in the stone ages. They're stuck in the world of Glengarry Glen Ross, Boiler Room, Wolf of Wall Street, get the dollar in through the door, Matthew McConaughey [inaudible 00:30:45]. That's where sales comp plans are.
What we haven't done is built a modern technical sales compensation plan that actually aligns the needs and incentives of the business, the customer and the rep. So I think that for a while there, I mean, I've been writing and talking about this for years, for a while there it fell on a lot of deaf ears because no one cared. People care now because all of a sudden for the first time, all of the things that we're talking about around retention and renewal rates and stuff are coming up. So I would say that my general advice to companies is to say what are the metrics that matter and ensuring that those metrics are the ones that your sales team is rewarded for.
I also call into question the notion that your sales team should have a 50-50 split on compensation. By the way, that doesn't just extend to the sales team. That's often how the VP of sales is compensated. So your executive, your chief revenue officer, your VP of sales who sits at the same table as your CMO and your CFO and your COO, that person also has a 50-50 split in most cases. Sometimes it's 60-40, but it's very rarely 90-10, which is what it is for almost every other executive on your team.
So salespeople get labeled as coin operated and mercenaries and all these other adages because the way we compensate them, the way we treat them, the way we measure them is in a mercenary sort of way. Again, I would call on founders and VCs and executives to rethink that and to instead come up with compensation that aligns the incentives, again, of the customer, the business and the rep and the leader. So I think that setting up a longer horizon where if the customer you sign up today ends up renewing tomorrow, the rep should get a kicker on it.
We should look at what the overall renewal rate is of the sales rep comparing it of course to the renewal of the rest of the business. If one rep is doing a better job of qualifying the right customers upfront, they should be rewarded for that. So things like that I think are missing from sales compensation and I'm excited to see them come to the front this year.
As an outsider, this all sounds very obvious like this is how it should work. I imagine a reason it doesn't is it adds complexity and then there's this feedback loop that's a lot longer because you have to wait to see if they renew. So two questions that I guess. One is you're saying that it works companies are doing it this way. You mentioned a few, HubSpot, monday.com. Are there others that folks can look at to model how they could approach it this way? Then is there any other reason that folks haven't rethought the way comp plans work? Is it just like, "Nah, it's working, we don't have to break it"?
Sahil Mansuri (00:33:36):
I'll answer the second question first because the answer to the first question is really simple. I think that there is a lack of transparency around how a lot of sales compensation plans work and companies tend to make it up as they go along. Oftentimes companies change their comp plans like each month, each quarter based on whatever is the business unit or the goal of the business. So I've seen things like, oh, company release product B after only selling product A. So we'll double the commission on product B because we want to get it in people's hands. Or we really want to target CPG customers so CPG customers are worth extra commission.
So companies tend to weigh down comp plans with basically a bunch of bullshit that doesn't have anything to do with how the compensation plan should be structured, but just has to do with the whims of the executives and the board that month or that quarter. So I don't know of any organizations I think do this excellently. I just know a lot of companies that do it better than most. I think it depends on your company or business and your incentive. But I would say that in today's economy, taking a longer term view to a sales compensation, instead the short term, like you're a hunter, your job is just to close deals and doesn't really matter, a dollar is a dollar no matter where it comes from is not true anymore.
So I guess that's the answer to that. Coming back to the other question though, which is why are sales comp plans not innovated off of because this seems obvious? First of all, it's obvious because of how I explained it. I'm not taking credit for it. It's just that I'm giving you a lot of context that you would not get otherwise, right? The context you would get otherwise if you just walked in and you got your traditional old school VC and CEO doesn't really know what they're doing and just listening to their board is like, here's how sales comp plans work, right?
You want to grow revenue, you want to get customers, you got to pay top dollar and you got to fire them up and set aggressive quotas and you got to push them and you want to put these big spiffs out there because that's how salespeople work. A founder doesn't know. This is the problem is that people don't know because nobody really understands sales and salespeople. They just kind of are like, "Well, I can't sell and I don't really want to do that. So I'm just going to hire this 50 year old white guy who's done this at a bunch of different companies and then have him bring in because it's always a 50 year old, it's always a white person and it's always a guy, right?"
Sales is one of the least diverse professions when it comes to leadership and it's one of the things that we really champion here at Bravado is this idea that 92% of sales leaders or VPs of sales are white. Over 85% of sales leaders are white. So is that representative of the total population of who should be a sales leader? No, of course not. It's just representative of the fact that like, oh, you don't want to innovate here. Just hire someone who's been there, done that before.
So you get a lot of sludge in the system. You get a lot of people doing the same shit over and over again even though it doesn't work, which is kind of the opposite of that Einstein quote, right? So founders don't know how to set comp plans. They are just listening to what other people tell them should be the way they do it. There's a way it's done and it's really hard to break that. It's kind of like when you talked about waterfall versus agile. Once you do agile you're like, "Wait, why would we have ever done it the other way?" Well, it's because everyone was always doing it that way, et cetera, et cetera. No one ever got fired for buying IBM, et cetera. You get where I'm going.
But the other thing Lenny that I think is problematic is everyone loves to optimize in the short run when it comes to revenue in sales. That's really I think the other big driver. If I offered you a plan that said, hey, you can grow by 20% revenue quarter over quarter or we can spike revenue by 75% this quarter though I don't know what that's going to do to the business in the future. Which of these do you want? Tell me how many founders really are willing to take option A? What do you think?
Let's say I just told you those were your options. I can figure out a way to increase revenue by 75% this quarter though I can give you no promise as to what that means for the future. Or I can make you a plan where we increase revenue 20% quarter over quarter for the next six quarters. Which of those two plans would you sign up for? What do you think is a percentage of startup founder six months ago, eight months ago, 10 months ago to indefinitely that would've signed up for plans?
Yeah, it's interesting. Hearing you describe the way it should be structured and then hearing you pitch this. I would definitely pick goal one. Let's grow. Let's get this. It'll work out, it'll work its way out. We'll figure it out later. Let's just keep new customers coming in. So I don't know. I guess like 99% probably choose that first one.
Sahil Mansuri (00:38:25):
Yeah, I think that's right. Well, I mean that is right because that's what everyone signed up for. But then all of a sudden, and again, that was okay because even if all your customers churned, it didn't matter because you could just go raise more money based on the growth and then just keep pouring more money on it, more money on it. No one gave a shit about the leaky bucket, right? Because you could just keep adding more water at the top. Now all of a sudden the faucet's off.
So given this seismic change in the market, how is it that we can reverse the short term thinking and start to actually build good businesses? Because I think that's the real problem, right? The real problem isn't sales compensation plans and quotas. That's a symptom. A real problem is we all just wanted to have hyper growth instead of thinking are we actually building good businesses. I wouldn't say that we at Bravado were immune from this by the way. It's not like I'm sitting here on my golden throne pontificating to the masses.
We made a bunch of decisions over the course of growing this business that were incentivized for the short term. Every single time we did that, it ended up being really expensive. Now, sometimes we caught that before money ran out and before we saw the problem. Sometimes we didn't and then we were like, "Oh, shit. It's a fire drill." But at the end of the day, there is no replacement for building a product that customers love and having a great go to market motion that brings that product and that value to your clients and ensuring that they actually are thrilled that they bought your product and are getting a lot of value from it.
Yeah, it sounds so simple, but the amount of companies that actually don't really care if their customers get value from their product versus just measuring top line revenue growth numbers and logos and whatever is I think more meaningful than people are willing to admit.
Today's episode is brought to you by Miro. Creating a product, especially one that your users can't live without is damn hard. But it's made easier by working closely with your colleagues to capture ideas, get feedback, and being able to iterate quickly. That's where Miro comes in. Miro is an online visual whiteboard that's designed specifically for teams like yours. I actually use Miro to come up with a plan for this very ad. With Miro, you can build out your product strategy by brainstorming with sticky notes, comments, live reactions, voting tools, even a timer to keep your team on track.
You can also bring your whole distributed team together around wire frames where anyone can draw their own ideas with a pen tool or put their own images or mock-ups right into the Miro board. With one of Miro's ready-made templates, you can go from discovery and research to product roadmaps to customer journey flows to final mocks. Want to see how I use Miro? Head on over to my Miro board at miro.com/lenny to see my most popular podcast episodes, my favorite Miro templates. You can also leave feedback on this podcast episode and more. That's M-I-R-O.com/lenny.
That's a great segue to the third topic, which is around retaining your existing customers and putting more focus on that versus top line, or yeah, new growth. Do you have some thoughts on just how to do that and why that's so important?
Sahil Mansuri (00:41:42):
Let's start here, which is cold call, cold email response rates have never been lower. Never been lower. I think you're seeing this across every sales team. Again, if you're listening to this and you have a sales team, you know what I'm saying is true. Top of funnel pipeline is drying fast faster than our planet's drying up in fact. Enterprise sales cycles are just getting longer and longer. We are lucky to have a couple of investors who have really, really broad exposure to the tech market. Everything from really large public IPOs all down to small startups.
In conversations with them, they've been really clear that they're seeing this incredible, the average enterprise sales cycle is 62 days, it's now like 115 days or something. So customers are dragging their feet, everything's going to no decision, no decision typically means I'm not going to say yes now because I don't want to spend the money. I actually like the thing but I'm not going to buy it. Which means the same thing for you as a business, which is that you're not making any money.
So in a world in which you can't sell to new customers, your only hope is to keep the ones you got for long enough to survive and then hopefully even maybe be able to upsell and cross-sell those customers into new products, as well as potentially leverage those customers to get warm intros into a potential new business. Psychologically, when times are tough people hoard, people keep their things close and people trust the safety of those they know versus those they don't. This is basic human psychology, right?
So given that that's the case, if you're a company that doesn't have a lot of customers and you're trying to go out to market and sell your product, you're in a lot of trouble. If you are a company that has a large customer base and you've done a shitty job of engaging, retaining, maintaining relationships with them and prioritized top of line growth, this is your alert. This section is for you. Because what you should be doing, I will tell you the most dramatic thing you could do and then we can kind of work backwards. Take your best sales people and make them CSMs. There's no point. There's no point in having your best salespeople sell.
Well, what's the point if people aren't going to buy anyway? If they do, they're going to buy in onesie, twosies, not these big enterprise deals. No one's going to sign these big accounts right now. Who in tech today is like, "Wow, I can't wait to sign a multi-year contract with a new vendor we've never tried." Right? Nobody's doing that. If people are signing things, they're signing for three month pilots or kind of like all sort... I mean, the deal sizes are coming down, et cetera. I mean, this is all very common. Make your best sales people CSMs and be like, "Your job is to make sure that all these great customers we have never, ever, ever leave."
CSM is a customer success manager?
Sahil Mansuri (00:44:35):
Thank you. Sorry, sorry. I'm too jargony. Thank you. So typically most sales orgs are divided into pre-sales and post-sales. Pre-sales worked with companies that are not yet customers to get them to sign up. Post-sales works with companies that have already signed up to help them either find value or retain or renew or upsell. That's how most sales orgs are divided. Typically, you put your best people in pre-sales because it's harder. It's harder to sell a new customer than retain the one you have. That's always the case because you got to actually be able to build trust, build the relationship, evangelize something that they haven't bought before.
So you typically take your best talent and put it in pre-sales, and then you take the people who are really good relationship builders and really caring and nurturing and not necessarily the people who are the most gifted at creating value or whatnot and you put them in CSM. That's obviously a huge generalization because I know many CSMs who are much better at sales and new business. In many businesses, it's actually harder to be a CSM because the product isn't very good. So you actually have to do a lot of selling even after the product is sold. So that was a big generalization. But it is, in broad strokes, true.
I would take your best account executives, pre-sales reps and I'd put them into CSM. I'd say it doesn't matter how much new business we work on in the next six to nine months because it's going to be hard anyway. But what we cannot under any circumstances do is lose our existing customers because replacing them is going to be impossible. So it's kind of like you got your leaky bucket, you got to patch that leak really, really fast and really hard. I think putting your best people on it is one good way to start.
Now, there's a lot of people who are going to listen to this and think that's crazy. Why would I take my best performer in a tough market and move them to post-sale? This is bad advice. Maybe. Maybe it's bad advice. I can't predict the future anymore than anyone else can. But I can tell you it's what we're doing. I can tell you I'm actually doing it. We're taking our best people and are moving them into CSM at Bravado. We're trying to maintain every customer we have because I believe that doing so sets us up for the best chance of success in the business. Maybe you disagree with that and you think that that's not right for you. You should do what's right for your business.
But I would say that it's not just talk, it's action. I'm doing it. I'm also telling every one of my portfolio, I do a decent amount of angel investing, I'm telling everyone of my portfolio companies to do the same thing. Discussing the same thing with our investors, with our board as well.
[NEW_PARAGRAPH]Okay so you put your best people on it. What else should you? So I think that what often goes underserved is the opportunity to help your customers themselves survive. I don't know. What's a good product example? Let's take something like a analytics product. Let's pick on Amplitude or Mixpanel or pick your favorite. If I was a company like that and I was like, "Okay, don't know how many new customers I may be able to sell, but I've got a lot of really good customers I want to keep." I would invest a tremendous amount of energy into helping product managers and product leaders get benchmarks and stats on how other product teams, what changes they're making.
Because the advantage you have as a vendor, this is advantage we have in sales as Bravado, but it's the advantage that every vendor has is you get a cross=section of what everyone who fits a certain ICP is doing at the same time. How good are you at extracting value out of that and finding ways of becoming less of a tool as part of the SaaS stack and more of a value added advisor that can help you actually plan and prepare for what to do next. I think most companies are not good at it. They put out a white paper for lead gen. I want to put out a white paper for customer retention.
One thing that we're actually doing is we're basically saying to all of our clients, "Hey, we'll tell you what percentage of companies that look like you are hiring or not hiring. I'll tell you how they're adjusting quotas. I'll tell you how they are changing their comp plans. I'll tell you how much they're paying. I'll tell you what percentage of their sales teams' hitting quota, et cetera, if you stick around with us as a client." I'm not just placing sales reps and say we make our business as a recruiting marketplace. So we help companies hire salespeople. Obviously that's slowed down tremendously because people are scared to hire and spend money right now.
But if they're getting insights on what's happening in the market, that's still valuable. That's still something that they can't get elsewhere that I am uniquely positioned to offer to my customer base. What are you uniquely positioned to offer to your customer base? Let's pick another example that I think is really easy which is Greenhouse or Lever or another app and tracking system. If you're an ATS and all of a sudden every recruiting budget's getting slashed and recruiters are getting laid off faster than any other department because no one's hiring, et cetera, you're probably at the most risk of being ripped out or being downsized or getting downward pressure to your [inaudible 00:49:37].
Can you do that nobody else can do in order to give your customers a really good insight into how they should navigate thinking about hiring versus layoffs versus headcount versus burn per department, et cetera? You've got some really interesting data, don't you? You know exactly how many customers have paused, how many roles and whatnot. If I was Greenhouse, I would be putting out all kinds of reports that tell me, let's use me as a customer here, "Hey, of series B companies that have roughly 50 employees, they used to have eight open head count, but now they're down to four. The main area that they're investing are X, Y, and Z. Salaries are moving up and down."
You could get a lot of insight from a company like Greenhouse. Then I'd be like, "Whoa, this is so valuable. I can't live without this data because this is actually helping guide my business decisioning." I think moving from a world where you're just focused on how can I jam product down your throat to how do I use my unique perspective in the customer segment we serve in order to create broader insights for the industry is something I would heavily prioritize. I'd take my product marketing team and I'd kind of shift them to be my research team. I'd take a data analyst or two and stick them on the project and start to create content that is exclusive for my customers and have them see that as another point of value that they can get that would maybe help stay off chart.
I love that advice. Be helpful. Find ways to be helpful even if your core product isn't... Basically go above and beyond what you're already doing as a software product and find ways to help your companies be more successful. Feels like there's just a ton of nuggets you just shared. I want to make sure we also get to this other topic that I think is also going to have a lot of great nuggets, which is around just advice for closing deals in this time. You touched on a couple of these, warm intros, a couple things. Anything else you could share of just ways to increase the rate at which you close deals during this wild time in the market?
Sahil Mansuri (00:51:40):
This is a good segue because it'll bridge us back to where you just came from and hopefully move us forward, which is warm intros. So if cold outreach is going to be less effective, then what increases in efficacy in this time is, again, warm intros. So one thing you got to remember as a more general statement is that companies either grow or they die. There are no middle. There's no, "Oh, we're going to cut burn and just try to survive the winter long enough so that..." That doesn't work, right? Because employees get demoralized, investors lose faith, the days become long and the nights become longer and eventually you just run out of energy as a business.
I think startups in particular are effectively energy driven. The more energy, the more belief, the more momentum that you have, the more tailwinds you have, the more things grow and feel possible. But of course if you look at the odds empirically, no startup should never begin because the odds are you're going to fail. That failure meets you in the eye over and over again as you're shrinking the size of your team, as you're shrinking the size of your budget, as you're doing fewer things and you're taking things away.
So I don't really believe in this like, oh, we are just going to survive mentality. I think you have to adjust, of course. I think you have to be a realist. I'm not suggesting that you be blind to reality. I'm just suggesting you also have to keep the energy going. So what I mean by keeping the energy going is to say, "Okay, let's get..." So here's a couple ideas. First is let's cut a bunch of stuff but keep some money that we're going to invest in doing an in-person customer event. Okay, why do I think that's a good idea?
I think it's a good idea because, first of all, we've all been stuck in our houses for a couple years and so when we get a chance to go on a trip for free somewhere, we tend to say yes. That's nice. Secondly, I think that you could be strategic and maybe have the trip be for customers only and in February or something. So maybe you survive the budget cuts this year because people are like, "Well, I got this great trip and I really don't want to miss it. Is there a way we can just keep this tool on?" You might think, "Oh, well, are you bribing customers or whatever?"
I mean, it's just psychology. I think you have to use psychology to your advantage. I would do a big customer event in February, invite all my current customers and say, "Hey, as long as you're still a customer as of Feb 10, 2023, you're invited to this all paid trip to Napa to go drink a bunch of wine for a week." I bet that would probably meaningfully change your churn rate. Yeah, it's not going to change everything but it'll change something. I bet it would. Because at the end of the day, people are people. Sales is done by people. It's a belly to belly human sport. It's not just lines of code on a piece of paper.
You got to talk to another human, which is what makes it hard and unscalable and more of an art than a science. But also makes it really fun because it just plays by different rules, a different set of rules than many other things do. Recruiting being the other thing that is this. So in-person customer event. The other reason why I like in-person customer events is because they're a perfect opportunity for you to get new deals done. So how does that work? Does that mean I also invite prospects to the event?
No, actually I wouldn't do that. So I think a lot of companies do this where they'll invite customers and prospects to the same event. They're like, "Oh, commingle and sell each other." Not the smartest way to do it. You want only customers in the event and you want to use that again to share thought leadership and such. But then, during all the happy hours and the lunches and the late evenings and whatnot where you start to say, "Hey look, in this market you're finding value in our product. Who are one or two other folks that you know in the same position as yourself that might also find value? Who do you know that has the same problem? Who do you know that's going through this? Who do you know that might benefit from this research paper, et cetera?"
You just start collecting a bunch of warm interest. But then you don't just stop at getting the name because a lot of teams stop here. They'll basically get the name and then they'll be like, "Okay, got the name. Now I'm done." Actually not the right way to do it. You get the name and you say, "Great, can you make me an e-intro? Actually even better. Can you connect me over text?" So one tip that I have for all founders, all sales leaders, everyone out there, stop using email. Email is where deals go to die. Text message is where deals get done.
So this notion that I'm going to e-intro you over email and that's how we connect is just far worse than the thing that I would really recommend, which I do all the time. We have a Webflow as a customer. I love Webflow. I know their sales leadership. We try to do a really good job for them. Anytime that their sales leader mentions a company that might be needing to hire or whatnot, my only response is, "Great, connect me over text." Then I get the text intro with the person.
Here's the other fun part. I don't take the introer off the thread. So the other thing we tend to do is we CC the person who responded, but in text you don't need to do that. You can keep the person on a little bit and it holds the person's feet to the fire to actually show up for the meeting. Again, it's these little things, right? 2% here, 3% here. This is how you win in this economy. You got to do all the things right. So you keep the person on the thread long enough so that you've actually built that relationship for the first call, obviously not forever. But in the first 10, 20 messages, I'd keep the person on.
That allows you to ensure that the person goes to you, which happens a lot, I'm sure you know. You get an intro and the person never responds or they cancel on you. You can't get back on their calendar. You stay with them. This happened recently where I got introed from one sales leader to another and that sales leader basically then had a family or legit situation but then got busy and was like, "I'm not taking this thing." But I just kept pinging into that group every week or two for actually nine weeks. Then by two and a half months later, the person finally is like, "I'm so sorry, et cetera." Only after my original contact was like, "Yo, you're making me look bad here."
So that pressure is what forced... Then we got them as a customer and now things are good. So it just takes all that. It takes those little things. You got to build a bridge from your current customer base to future customers and parlay the goodwill, relationship, et cetera that you've earned in serving your current customers to get new ones. Because otherwise, I don't think it's just relying on a bunch of SDRs and cold emails and stuff is going to get you through the next six to 12 months.
I love that tip. Feel like there's probably more nuggets. I'm going to keep fishing in this well of tactical advice for closing deals. Is there anything else that you've found? I love that texting tip. I feel like I've been on the end of that one. It works great. So yeah.
Sahil Mansuri (00:58:30):
From me. Yeah, that's right. That's right. For example, I didn't have your phone number and I told my wife, "Make sure you take a selfie with Lenny and then send a text message to the three of us on one grad so that I know how to get a hold of Lenny in case he calls.".
Here we are now.
Sahil Mansuri (00:58:45):
Here we are now. That's right. But the point is sales when done well doesn't feel weird, okay? If it ever feels weird, you're a bad salesperson, right? I've been selling now for 14 years. I've sold literally hundreds, millions of dollars worth of deals. I could pretty much call any customer I've ever sold to and have a conversation with them and it would say, "How's it going?" Whatever. That's because I put a tremendous amount of energy into investing and building a real friendship, not relationship, not business, friendship with the people that I sell to.
So I'll tell you a couple of sales stories and maybe from that we can mine the nuggets that you're fishing for. I will tell you about how I sold to Facebook when I was at Glassdoor. This is a fun story. So Facebook was the Moby Dick of Glassdoor. I think the first time they tried to sell to them was end of 2008 or something like that. Facebook was one of those accounts that obviously should be on Glassdoor because the way Glassdoor's product worked is that the more people that came to your company page on Glassdoor, the more value there was for you as a recruiting firm to put branding and to put jobs and whatnot.
Facebook was the most visited page on Glassdoor. So by virtue of that, it was the best account to sell to. It had gone from CEO to VP of sales to new VP of sales to rep to rep, et cetera. I finally got my hands on it Feb of 2011. The only reason I got my hands on it is because I closed Microsoft. I think I closed both Microsoft and Google at that point. But certainly at least Microsoft. Certainly at least Microsoft. Well, it's important to the story, not to brag.
So I looked at it and I looked at who we are talking to, Lori Goler, who's the chief talent. I think she's still the head of talent there, but was the head of talent who we had pitched and every time we got the same response, "No, we are not interested in outside partnership at the time. No, we are not interested." I think she had a canned response for all vendors and it was just the same response in the CRM over and over again. So again, Einstein, right? Same thing over and over again, different result.
So I tried something different and I sat there and I went through every single review that had been written about Facebook on Glassdoor. First I had it pulled by a data scientist and did a word cloud and did a bunch of analytics on what was being discussed there. Pulled salary ranges, pulled salary ranges for Google and Amazon and Microsoft. So Glassdoor had three types of information. They had the review of the company, they had the outlook of the company and then they had the review of the CEO.
So it was like, "Do you approve of Mark's handling the company? Yes or no?" Mark had I think 96% approval rate. He was one of the highest rated CEOs on Glassdoor at the time. I have no idea what it is today, but that's what it was then. So I basically called every review, all the salaries and then Mark's approval rating, and turned it into a nine page report that broke down how Facebook employees, specifically software engineers because that's what we're specialists at recruiting for, how software engineers at Facebook talked about working at Facebook and how it compared to how Google engineers talked about working at Google and whatnot, salary band comparisons and even reviews of Mark specifically versus the other CEOs of the other big tech companies.
Then sent an email to Sheryl Sandberg, a cold email to Sheryl Sandberg whose email address I did not have, but that I assumed had to be one of 15 things. So I think I put email@example.com in the two line and then in the BCC line put every variant I could think of, everything. I mean everything I could think of I put, underscores and dots and first name and last name and abbreviations and et cetera. The title of the email was Mark's approval rating on Glassdoor.
I was like, "Hey Sheryl. I'm from Glassdoor. I was doing research on Facebook and comparing it to all the other big tech companies. I personally work with Microsoft. So I have a little bit of insight in this. Here's what your employees think about you. Here's what Mark's approval rating looks like versus others, et cetera, et cetera." This whole research report, I kind of broke out some highlights, a couple screenshots, attached the report and said, "Hey, I'd love to discuss this with you sometime."
I think I sent the email around 3 or 4PM on a Sunday. By 6PM I got a response back from Sheryl Sandberg CC'ing firstname.lastname@example.org or something like that, which I later found was email@example.com saying, "Hi Sahil, this is super interesting. We'd love to meet with you tomorrow. Are you available to come to Facebook HQ at 10AM.' So at the time I was 22, 23 years old or something like that. It was pretty new to Glassdoor anyway. So then of course I said yes. I sent the email to the CEO. He was like, "Do you want me to come and whatever?" I just said, "No, I'll handle it." I brought a customer success person and the two of us went.
We actually got to meet first with Sheryl and then I got to go to the fishbowl. I don't know if you know this story, but Mark had a famous office that was all glass in the middle so that he really played [inaudible 01:04:15] or whatever so his known as the fishbowl. So I got to go to the fishbowl. I met Mark Zuckerberg himself. As it turns out that report and that rating got added to their weekly packet because Mark wanted to know on a weekly basis how his rating and how the employees view of Facebook was, how it was changing week over week and what people were writing, et cetera, and it became a thing.
I don't know if it's still a thing today, I have no idea. But I got to have this in depth strategic conversation with the executive leaders of Facebook around their reputation, what their employees thought, their pay bands, their interview questions, leadership, guidings, shared the word cloud, sentiment analysis, et cetera. Needless to say, of course, we closed a massive deal with them and whatnot. But that's the kind of shit it takes in order to close deals, right?
So this idea that I'm going to go onto my CRM system and fire up a hundred cold emails and I'm going to close business, that works when capital is cheap and everyone's buying everything and every rep hits quota and every company's growing, et cetera. That shit does not work when you are in tough times and desperate measures, you got to figure out a way to build your business. So what I would say is you got to really over, over, over index in the whole I'm going to teach you something, right?
It's not that I'm going to give you value because that's a really weird thing to say and it's not like my product's going to solve a problem for you because, frankly, I don't know if you know what my problems are. But I think that one thing I would advise is how can I do something that will make this worth your time in a way that it isn't about buying my software or putting job ads on my site. So that's how Facebook became a customer of Glassdoor.
That is an insane story. I feel like those are moments that salespeople live for. How did you feel once you got that email that day? Were you just freaking nervous? Were you jumping up and down [inaudible 01:06:15] might work?
Sahil Mansuri (01:06:16):
I love to play chess. It's my favorite game. The reason I love chess is because I love to think a few moves ahead. I expected to get that email back. I knew when I sent the email that this was going to work. I was like, "There's no way this won't work." The only way it wouldn't have worked is if she never saw it. So if she sees this, she's going to respond because it would be crazy for her not to. The information on here was so good. So I felt a sense of satisfaction that I had played the game right in a way that no one else that my company had. No one else understood the psyche of the buyer.
So to me, sales is I don't care about the commission. I've never cared about the money. I think this is true for most great salespeople. I think this is actually true for most people who are great at something is that they don't do it for the money. They don't do it for even necessarily the trophies or whatever. They do it because they love it. Winning, it's contagious, it's addictive and it's rewarding. Closing Facebook was a blast because I really got a chance to flex into something that I take a lot of pride in, which is being able to deeply understand my customers where they sit and how I can be not a sales rep, but someone who actually changes your perspective and how to do your job. That's what I live for.
So I think that's what you have to do in order to be a great salesperson is I think you have to be willing to go beyond just the, oh, I want to hit my quota or whatever. If you're a founder and you're trying to sell in this market, it's like how do I get my product in the hands of customers? You got to go beyond. How do I change the way you operate as a business? How do I do something that is transformative? That Glassdoor rating literally got added to the ELT report that went out every single week. That's the part of the story I'm proud of.
You just mentioned that you don't do sales, that you're not a salesperson technically anymore. You run this company. Do you miss that job being a full-time salesperson?
Sahil Mansuri (01:08:19):
I think CEOs are full-time salespeople. I mean, think about the job of a CEO, right? Let's start from the infancy, right? Let's start from starting a company from scratch. First thing you got to do if you want to start a company is you have to convince yourself to do it. You got to sell yourself on the fact that you want to do this. This is where most people fail actually. They can't sell themselves. They're not able to convince themselves that they should take this leap. They don't believe in themselves enough to do it.
So first you got to be good enough to sell yourself. Maybe that's delusional. I don't really know how to coin that, but let's just say sell yourself. You got to then sell other more talented people than yourself to join you at a time at which you have no money, often no idea, no traction, nothing. They're typically making a lot of money at a well paid... If you hire great founders, they have a choice somewhere to work and you got to convince them to believe in you, believe in your idea, believe in the future that can be. This is the second place where most people fail.
Assuming you do those two things, you still got to do one more thing, which is you got to actually sell an investor to give you capital based on typically virtually nothing or maybe very little attraction. Then you have to go and convince your initial customers to believe in you. Because sure as heck no startups product is great. Everyone wants to be like, "Oh we're going to go change the world." But you're not changing the world today, right? You've got 1/100th of the feature set of any of your competitors and all you have is this dream and this energy and this belief and somebody who's willing to take a bet on you. You got to get someone to be willing to bet on you. That's sales.
Then if you do all that, then maybe you need to get some press. So now you got to convince a reporter to write about you and you got to be able to do that. Then maybe you need to hire some more people. So you got to convince some candidates to come work for you. I mean, spend my whole day selling. All I do is sales. All any founder does is sales. It's kind of like venture. People misunderstand this. VCs are salespeople. 100% of VC is a salesperson because they're selling LPs to give them money and they're selling CEOs to take their money in exchange for equity. That's the job of a VC.
All the analytics, all the data and the this and the that, those are just updating their CRM. The core function of a VC is to sell. The core function of a CEO is to be a great salesperson. Like any great salesperson, you have to balance cynicism with optimism. Great salespeople don't have what I call happy ears. This is a problem that people misunderstand. People think that being a great salesperson is being ever the optimist. That's actually not the case because then you'll waste your time on a bunch of deals that'll never close. Great salespeople are extremely pessimistic internally and are great at being able to then still be optimistic externally.
Where they're actually trying to disqualify you. They're looking for signals that you're not going to buy and weeding those out, while still at the same time positively spinning you and selling you. That ability to juxtapose is what diverges good from great. Because good salespeople will get misled by customers who tell them they want to buy, but if you would really press harder, you'd understand that they can't or won't or whatever. So you waste your time on a bunch of companies that never buy versus great salespeople know how to prioritize and spend their time properly.
The same applies in venture. If you are a CEO who's fundraising, I cannot tell you, honestly Lenny, I can't tell you how many other CEOs I know get constantly misled by VCs where the VC says one or two good things and they're like, "Oh, they're definitely going to invest." As opposed to giving that VC every out to not continue the conversation. If they still are willing to talk to you after that, then that they're for real. I think that being a CEO and being a salesperson are the same job. Different forms of it, of course, different audiences, different products, et cetera. But ultimately they're the same thing. So no, I don't miss it. I do it every single day and I love doing it. I'm learning more and more every day from the failures and shortcomings I have.
It's very clear that you love doing it. It's so interesting just to watch the energy when you talk about sales. I rarely meet folks that do sales. So it's really fun to dive into all this stuff. We promised folks five topics, you've gone through four. The last one I wanted to touch on, and you've already talked a bit about this and maybe there's just a quick tidbit to add here is around just how important growth continues to be for companies at this stage. It's easy to be like, "No, the markets are tough. People are going to give us a little bit of a leeway because no one's going to be able to grow." Your point is it's still incredibly important. Is there something you want to add there before we get to our very exciting lightning round?
Sahil Mansuri (01:13:13):
I guess there's just one last thing, which is innovation is often put to the side. People just try to do the things that everyone else is doing. So I'll tell you something that we did at Bravado as an example of this. So we run a recruiting marketplace and competing with LinkedIn and AngelList and hired and all the rest of it. Like all those companies, we have seen a massive slowdown in our business. Unlike those companies, we didn't take that as kind of the end of the road for growth for now. But instead said, "Okay, so let me put myself back in the perspective of my buyer, my customer who are often founders and CROs and CFOs."
Those are the people that tend to buy from Bravado because they're the people who care the most about growing revenue. I can't hire anymore full-time salespeople because the market is tough right now and I can't increase my burn or what, but I still want to get new customers. It's just I can't afford to hire full-time people. In fact, I might be forced to lay off my team. What do I do? We kind of just sat there with a think whiteboard and just said, "All right, let's put ourselves in this situation. What would you do?"
One of the things that I think would be really interesting is I'm actually willing to pay money to acquire customers. I just can't take the risk that I hire someone and they won't bring me customer. What if we created a 100% commission only sales role? It doesn't exist today in SaaS. It does exist in other places, it just doesn't exist in SaaS really. But what if we created a way for sales reps who can't find a full-time job because the market is slow and companies who can't hire a full-time sales rep but still want customers to work together on a commission only basis.
Now a year ago, this product would not have worked, right? Because the supply-demand equilibrium was so tilted where every company needed great sales talent and every sales rep was getting multiple offers. So in that world, this product makes no sense. But in a world in which you have far more sales reps who are looking for work and far fewer companies who are hiring, maybe we can create a new model of sales.
[NEW_PARAGRAPH]If Airbnb and Uber grew dramatically during the pandemic and actually are somewhat counter cyclical businesses, because if you can't find a full-time job then you find gig work, what would we be able to do for our community that instead of putting them in a different field, lets them use the skills, the network and the expertise they already have in order to do the thing they want to do, but be able to do it in a down market as well. So we launched something called Bravado Flex, which is a way for companies and candidates to work together in a non full-time employment way.
That can mean contract hire, it can mean a hundred percent commission, it can mean fractional work, it can mean small stipend plus milestone base. There's a bunch of different ways at work. Overnight, we went from having a massive slowdown to our business to one of the best months that we've ever had in company history, which was last month, and this month will be even better than that. So while our full-time recruiting business slows, our fractional business grows.
So I use that as an example of the type of innovation that companies should be thinking of. As well as if you are a company that is thinking of increasing revenue but doesn't have enough levers to pull, maybe this is one that you might want to explore. But I think it comes back down to that fundamental staring at the whiteboard being like, "If I'm a customer and I'm in this world, what can we do today to change the rules of the game?" Because sometimes the rules of the game are stacked against you. As a recruiting business, the rules to the game were now stacked against us.
No one's got money. People don't want to hire. There's hiring freezes, et cetera. There's more candidates in the market than ever before. Companies are going to be less and less likely to want to pay us to recruit for them. There's nothing I can do about that. I mean, I can stick my head out the window and scream and cry and complain, but that ain't going to get me anywhere either. So what I need to do is change the rules of the game and start to think about the problem differently.
I think that not enough founders do that. They just kind of bash their heads against the wall with the same kind of preconceived notions of what success may or may not look like. So I would really advise, and I'll give you some examples of where this goes beyond Bravado Flex, but change your pricing strategy. Now, let's say that you sell a product and it's $12,000 per year. Try charging a thousand dollars a month and going month to month. Try charging 20 bucks a day and going day by day. Then you might be like, "Well, wait a minute. That just changes to every..." But you have to adapt, right?
If your old model is not going to work, it's asinine to just sit there and then try to make minor changes like, "Oh, instead of 12 we'll reduce price to 10 or something." People try to optimize their way out of problems. You can't optimize your way out of a problem. You got to completely change the rules of the game. In doing so, you suddenly will learn something new. Bravado Flex may not work forever. Who knows? But maybe, just maybe, as we've been doing this, we've realized that there's actually a lot of sales reps that prefer this because they can do flex for multiple companies.
So all of a sudden we learn something really new, which is that our audience are the same candidates that we're replacing to full-time jobs, are actually in some cases preferring doing this fractional work. Because now they don't need to go to all the meetings and they don't need to update Salesforce. They don't need to do all the boring shit that sales reps don't like to do. Instead, they can just work for three companies, use the existing network they have, get meetings set up for all of them, pitch the best product to the right customer, and all of a sudden they feel like instead of having to pitch the one hammer that you need to use for every... They have a wide tool set that they can bring to their customers.
All of a sudden companies are like, "Well, wait a minute, this is actually pretty cool because now instead of just hiring one person at a time and training them, I can hire 10 people at a time and I can have multiple kind of fish in..." So we just changed the rules of the game around sales hiring as a market. I think that's the sort of innovation that you have to bring to the market if you want to survive in the downturn, which you can't just sit there and just try to do the same stuff over and over and over again. You got to really be willing to break all preconceived notions of what success looks like, innovate something new and then take bigger swings I guess is the thing I would say.
That's a very empowering way to close out our chat. But first, we reached the very exciting lightning round. I'm going to ask you five questions. I'll go through them pretty fast. Whatever comes to mind, fire it away. Does that sound good?
Sahil Mansuri (01:19:53):
That sounds great.
What are some books that you recommend to other people, like two or three, maybe even one book that you most recommend to other people?
Sahil Mansuri (01:20:01):
There's one book that I think every person should read. It's called Stumbling Upon Happiness.
Yeah, Dan Gilbert I think is the author.
Sahil Mansuri (01:20:07):
Yeah, that's right. That's right. It's a really fun book. A lot of interesting studies and readings. I think especially if you're a founder or an executive who wants to learn how to sell and wants to understand how your buyers make decisions, I think it's really impactful and teaches you a new way to think about sales using psychology.
Great pick. Second question. Favorite other podcast that you like to listen to?
Sahil Mansuri (01:20:29):
There's actually only two other podcasts I listen to, so it's a small choice. I listen to the All In podcast because I love the fact that they have really good show notes so I can just jump to the section that I want to hear them talk about instead of listening to like-
We got those show notes here too.
Sahil Mansuri (01:20:43):
That's right. I'm excited for that as well. Of course, I listen to yours, but I figured that was too on the nose.
It's off limits.
Sahil Mansuri (01:20:50):
On the nose, yeah. Then the other one is the How I Built This.
Great choices. What's a recent favorite movie or a TV show that you've really enjoyed?
Sahil Mansuri (01:20:59):
I don't watch a lot of TV or movies. but I would say that a strong exception to that is I really like The Blacklist, if you've seen that show. But it's a pretty good one. James Spader. Yeah, I really love James Spader. I find him to be someone I really, really like. I'm also a big fan of Aaron Sorkin so I liked The newsroom a lot and then West Wing and whatnot. I think the thing is I really nerdy stuff like Jeopardy and Frasier. I never liked Friends. I think it's just the dork in me that I like to watch nerdy stuff.
Final question, what are five SaaS products that you find incredibly useful at your company, especially new ones? But if not, anything that are just I love these products.
Sahil Mansuri (01:21:45):
I'm a huge Luddite because my favorite tools to use are pen and paper. I like to write by hand. I like to write on a whiteboard. I enjoy the tactical part of that. I've tried to use the reMarkable tablet and other stuff like that, but I don't get the same pleasure of writing on actual pen and paper. That's my favorite. I mean, in terms of tools that we use it at Bravado that are hugely impactful, I mean, Slack is the central OS of our business as I'm sure it's for many others. Obviously we use Zoom a lot to meet and that's a core one.
Noshell operates everything for us as well. So I don't think I'm saying anything that that's exciting here. There's a product called Grain that I really like that I think is really cool. Grain allows you to make clips of Zoom meetings and send them out. The reason I really like that is because if I have a customer call, if I have a user interview or a VC call or whatnot, I can take a snippet of something that someone said and let other people hear it from their words. I think that's really powerful and something that I really enjoy.
Sahil Mansuri (01:22:47):
Maybe that one.
Great. Love it. Sahil, this was amazing. I feel like I want to be a salesperson now. You infected me, but I still would be really bad at it. But there's a lot of nuggets in this episode that would make me less bad. So thank you for that.
Sahil Mansuri (01:23:02):
I'm going to jump in. You've said that once. you've said that once to me before and I can't let you end on that note because it's not fair because Lenny, you are a salesperson and you are one of the best that I have met. The reason why that's true is because you have built a business from the ground up. I didn't know who the heck you were a couple years ago now. Maybe you had a big brand more than a couple years ago too, and I was just the idiot. But everybody I know now knows and respects you. The reason for that is because, I mean, I think you have really deep knowledge on product. I think there's probably other people that have really deep knowledge on product too.
Many, many more.
Sahil Mansuri (01:23:41):
But you are the best at marketing that and turning that into... You got distribution around it. You've given so much to the world of product and been kind of a bright light that so many people have gravitated around and such so that when you launch Lenny's Talent Collective or Lenny's whatever podcast or whatever's the latest Lenny thing, in fact I remember you did a poll to try to figure out what should be the name of this podcast and ultimately the thing that one was Lenny podcast I think. So I think that is the core of sales.
I want to go back to the first principle, which is that sales when done well does not feel salesy. Sales when done well is a delightful experience. People love paying you money. People love consuming your content because it's good. That's what makes a great salesperson. Facebook didn't regret taking that meeting with me. Facebook didn't regret signing that contract. They enjoyed it, they liked it, they were happy for it and it felt delightful to them and that's how sales should feel.
So this notion that the way you're good at sales is because you're super extroverted and pushy and willing to put yourself out there and whatever is a misguided notion. You are the future of sales. If every salesperson gave a ton of value, played the long game, nurtured their community and created products and services based on the feedback from their customers, the world would be such a better place. So don't sell yourself short, my friend. I think you are a phenomenal salesperson.
Damn. What a way to end it. I so appreciate that. I'm going to deflect from this epic compliment and move on to closing this out, but I really appreciate that. Where can folks find you online if they want to learn more about you, Bravado and how can folks be useful to you?
Sahil Mansuri (01:25:32):
First of all, you can just email me. I'm just firstname.lastname@example.org. I love responding to emails and meeting people, so I'm always down for that. Secondly, you can find me on LinkedIn where I regularly post content around sales and revenue and hitting targets and all that. Then lastly, if you want to learn more about Bravado, it's just bravado.co. Sign up and check it out. If you like something, let me know. If you don't like it, then please let me know so we can make it better.
Amazing. Sahil, thank you again for being here, for sharing all your wisdom with us.
Sahil Mansuri (01:26:04):
Thank you. Thanks for having me.
Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcast, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.