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GE17:TheSalesProcessthatGrewEchoSignto$100MinRevenueswithJasonLemkin(podcast)

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TheSalesProcessthatGrewEchoSignto$100MinRevenueswithJasonLemkin(podcast) 1

Eric:Helloeveryone.Welcometothisweek’seditionof“GrowthEverywhere”whereweinterview

successfulentrepreneursandbringyou;businessandpersonalgrowthtips.I’myourhostEricSiuand

todaywehaveJasonLemkinwho’saco-founderofEchoSign.Jasonhow’reyoudoingtoday?

Jason:Doinggreat.ThanksforthetimeEric.

Eric:Yeah.Thanksforjoiningus.Soyeah,Jason,whydon’tyougivetheaudiencealittlebitaboutyour

backgroundandthenwe’llgofromthere.

Jason:Sure.So,I’marepeatfounderCO.MylastcompanyisacompanycalledEchoSignwhichwas

boughtbyAdobeonJuly15,2011at3:01p.m.Idorememberitwell.ThenIwasthevice-presidentof

webbusinessservicesatAdobeandfrominceptionofEchoSigninJanuary1

st

of’06.

Throughthat,grewthatbusinessfromzeroto,whatisnow,ahundredandforty-fourmillioninreferring

revenueattheendoflastyear.So,Isortof…What’sinterestingaboutme,atleastintheSassworld,in

thisBtoBworld,I’vedonethezerotoahundredmillionjourney,I’vemadeatonofmistakes,andIkind

ofdecided,backwhenIwasacorporatevice-presidentatAdobe,totheextentthatIwasallowedto,that

Iwouldjuststartsharingsomeoftheselearnings.

AndsoasyouknowwekindofbuiltacommunityaroundthiscalledSasStr,we’vegotahalfamillionfolks

readthisstuffeverymonth.It’sallaboutgoingfromtencustomersandwhateverthatrevenuemaybe,a

thousanddollars,athousanddollarsamonth,tosortoftenmillion,thatkindofjourneyfrom,youknow,

havingsomethingwheretenpeopleactuallybuyyourproducttowhatIcallinitialscale,tenmillion,when

youcannolongerbekilledright.Andsothegoalistoshareallthehardlearnings,whatworked,what

didn’t,hownottohiretheterribleVPofsales,whatmarketingreallydoes,howtothinkaboutcustomer

successsothatultimatelyyoucandoevenbetterthanme.That’smygoal.

Eric:Gotit.Perfect.AndIthinkeveryonethat’swatchingthisneedstoreadJason’sblogandalsohis

answersonQuora.There’snothingouttherelikeitrightnow.It’sprettymuch…Itsworldclassstuff

so…literally,everything.SoJason,howdidyouguysgetthefirstonehundredusersforEchoSign?

Jason:Yeah,andyouknow,timesweredifferent,right?So,thewaywegotourfirsthundred,infactit

workedwellforusuptoapoint,wasreallyjustpressright?Todaywecallitcontentmarketing.Thingsare

alittlebitmoresophisticated.So,somethingsaredifferentandsomethingsarechanged.Literallywe

launchedonTechCrunchbackwhentherewereliketwoTechCrunchpostsadayin’06.Nooneread

TechCrunchbackthen.Itwasjustthisfunnylittleblog,butitwasenoughtogetusgoing,right?Andso,

myuberlearningsfromallthat,andI’mahugefanofPRcontentmarketing,whateveryoucallittoday,is

formost…forBtoBservicesit’snotenough,okay?

Youcan’thavethismagical,[what’sapp]explosionjusthotoffsomepress.Butitcanhelp.Itcanreally

help.Itcangetyousomeofthosefirsttencustomersorthefirsttwenty.That’snotenoughtobuilda

hundredbilliondollarbusiness,butifyoudoitrightitmaybeenoughsothatyoucanreallylearnandget

youinthepipeline.

Eric:Howdidyougettothatnextlevel,Imean,theinitialPRbumphit,right,butwhatgotyoutothefirst

thousandorfirsttenthousand?

Jason:Yeah,Ithink...SoinsomewaysIdideverythingwrongbecauseIhadn’tdoneitbefore.We

launchedwithoutclearpricing,whichIlearnedwasadisasterforapaidservice.Welaunchedwiththe

wrongmessagingandthewrongmarketingpositionandthewrongeverything.Butwesortofjustdidone

thingrightinthebeginning,right?Wereallyjustdidtwothings.Anditwasn’tenough,but…Itwas


enough,butwecould’vedonebetter.Wedidtwothings:one;whatevercustomerwehadwelavished

themwithjustincredibleattention.Iknowthisseemsobviousmaybetomostpeopletoday,butyouget

tencustomers,atpresstheypay$10amonth.Wecallthatbeermoney.Allwedidwithourfirsthundred

orsocustomersisdrinkbeerbecauseitcouldn’tevenpayoneinchinyoursalary.

Sothatwas…Ididn’tthinkitwasveryfunny,buteveryoneelsethoughtthatwasfunny.ButwhatI

knew…Here’stheonethingIknewfromthetwelvemonths,andtheywerereallyroughthefirstyear,

here’sthething.Iknewforeveryonecustomerwehad,wecouldgetanother.ForeveryQualcommwe

couldgetaGE.ForeveryBTwecouldgetaDell.ForeveryweddingphotographerthatusedEchoSign,

eventhoughwehadonetostart,Iknewwecouldgettwo.So,ultimatelymygoalwastojustdouble

downonwhateverwasworking.

AndIonlyknewhowtodotwothings:one;keepthecustomerswehadhappy;andtwo;howtotryand

keepupthecontentmarketingPRstaff,sotheviralengine,oratleastthewordofmouthenginecould

run.Andtheuberlearningwasitallworked,okay?Buttheproblemis,ifyouwanttogetwordofmouth

andviralityworkinginBtoBversesBtoC,itjusttakeslonger.So,literallyittookeighteenmonthsfor

thatenginetowork.Becauseyouthinkaboutit,Isignedupfortheproduct,whichwasMicrosoft.Itryit

forthirtydays,right?AndthenmaybeIconverttopay.

Butmaybeittakesmethreeorfour,sixmonthstofallinloveandthentointeractwithenoughpeople

throughacontract,orwhateveritis,thatwillcreateasecondgenerationcustomer.Andittookuseight

monthsfrompaidtogenerateasecondgenerationcustomer.Andifyougobackintimesinceinthefirst

quarterwehadtencustomersitwasreallyhardforthatviralenginetogetmomentumforabouttwo

years.But,oncewewereintoabouttwenty-fourmonthstheviralandwordofmouthtogether,whatIcall

mini-brand,wasconsistentlythemajorityofourrevenue.Butthatjustcan’thappeninthebeginning,

right?Theengineisn’tlearningyet.

Eric:Gotit.Yeah.So,…

Jason:AdifferentwayI’velookedatit,wecantalkabouttechnicalthings,butIreallythinkthekeytoall

thisstuffinSassistodowhateverithumanelytakestogetamillioninreferringrevenue.Getupto

eighty-thousand,fifty-thousand,ahundred-thousandamonth.Andthere’sa…There’sonlysomanythings

youcando,butyoudon’tknowwhichonewillwork.

Onceyougetuptoamillioninrevenue,theneverythingworks.Thenattwomillionitallbecomes

programmaticandlogical.Butwe’reallgoingtohavetofinddifferentwaystogettoamillion.Ifyou

knowhowtosell,maybenotbytraining,butbybackground,maybeyou’lljustliterallygrababagand

magicallycreateamillioncustomersoutofthinair.Ifyou’reterribleatsales,butyou’rebrilliantat

contentmarketing,maybeyou’llbuildanincrediblecommunity.LiketheguyssayatBufferdid,“Gofor

justabrilliantcommunity.”

Idon’tknow,butinthebeginningyou’vegottohackitwithwhateverofthepanoplyofthingsyoucando

toyourcustomers,that’syourbestbet.Forus,forme,itwasshowerwhatwehadwithlove.Iwasgood

atthatbecauseIthinkIwasjustsothankfulthatwehadanycustomers;andtobeenthusiastic,totryto

getthePRattentionjustthroughsheerpassionforwhatweweredoing.ThosewerethetwothingsIwas

goodatandIwasprettymuchterribleateverythingelse.

Eric:Therecurringtheme,I’verepeateditsomanytimes,isit’sjustdoingthethingsthatdon’tscale.

Everysingleentrepreneurhasdonethatinthebeginning.It’sliterally,that’swhatit’sbeen.Andwetalked

about…


Jason:Ithastobetheonesthatworkforyou.Thethingisifit’sunnatural…ItellyouIwasgoodatcold

callingtobigcompanies.Icouldcallup,youknow,IcoldcalledintoGoogleandweclosedGooglethat

way.ButthenwhenIhadtocloselikesomedebtconsolidationfirminIndianaandmakefiftycallsaday,I

justcouldn’tdoit.Iwasn’tthefiftycalladayguy.Imean,Idesperatelywantedthiscompany,whichwas

abouttogounder,tosurvive,butIcouldn’tdothefifty.Otherpeoplecandothefifty.So,Icoulddothe

largedeals,soyeah,thissortofstuffthatdoesn’tscale,butyouhavetopicktheonesareagoodmatch,

becauseifyougooutanddothisstuffthatdoesn’tworkforyou,it’shopeless.

Eric:Ithinkeverything’sreally,Imeanyoureadatonofarticlesoutthere,evenyourarticle,soeverything

attheendoftheday,it’sdone,Imeanyoudoitforyourselfbasedonthecasebycasebasis.Youdon’t

havetonecessarilyemulatewhatpeoplearesaying.Whatworksforsomeoneelsemightnotnecessarily

workforyou.AndIthinkalotofpeopleneedtounderstandthatbecause…Justbecauseyouseedata

herethatprovessomethingdoesn’tmeanit’sgoingtoworkforyou,right?

Jason:Yes,that’stheparallelofthequantitativeblogpostthatmakesitsoundlike,ifyoucouldonly

increaseyourfinalconversionfrom2.34%to2.684%you’dhaveabilliondollarcompany.AndanytimeI

readanarticlelikethatIwanttojumpofftheroof.

Eric:Samehere.So,Ithinkinsomeofyourblogpostsyoualludedtogetting…there’recertainrevenue

checkpoints,sotospeak,thatyougetlikeyoumighthitasnagso,youknow,yougettoonemillionor

twomillionandmaybetenmillionaswell.Canyoukindoftalkaboutthosecertainsnagspeoplemight

expectontheirwayup?

Jason:Yeah.Ithinkthere’smaybefour.Thefirstonegenerallycanhappenaroundhalfamilliontoa

millionrevenue.It’stypically…Let’sstepbackforaminute,okay?Gettingevenjusttenpeopletobuy

anotherweb-serviceisimpossible.Doyouseriouslyneedtobring…Areyouseriouslydesperatetobring

anotherweb-serviceintoyourbusiness?Imean,youknow,maybeyou’llplayonyouriPadatnightandgo

theAppStoreorGooglePlayandfindsomecoolnewgame.Wehaveanenormousappetiteforthat,

right?Orhopefully,maybethere’sactuallysomethingnewonNetflixIwanttowatch,soI’llspendtimeon

Netflix.

Buthowmanypeoplegohomelateatnightandsearchforbusinessapplications?There’sacoupleinCIOs

officesofinnovationofficers.Thereareahandful.Iknowwecantalkaboutthat.Butit’sanextremely

smallnumber.Somypointis,gettingtenusers,ifyou’reusingacoolphotoshareapp,doesn’timpress

me.Gettingtencustomersisepic.We’vedonetheimpossible.Andsokudos,it’sjustnotenoughrevenue.

Andsothenyou’veactuallydonetheimpossibleandthencanyoubuildsomethingthat’sreal...that’s

actuallyreal.You’llgetafirstcheckinwhenit’salmostreal.Whenyou’realmostthere,atwhatIcall

initialtraction,butyou’reonlyhalfwaythere.

Thatcouldbefivehundred-thousand,eighthundred-thousand,amillioninrevenue,you’rehalfwaythere.

Whatwillhappenisyou’llbegoodatit.Thefounder,seethefounderisvisiblygoodatitandmaybe…But

you’resosmall,youdon’thaveenoughmoney,youdon’thaveenoughthis,andthey’llbemaybeonekid

that’shelpingyou.Thatsortofworks.Buttheengineisn’tquiteworking,right?Thenumbersarethere,

butthe“eh”…youcan’tfeeltheengine.Andthat’satoughtime,atleastbecauseyoudon’tknowhowit

comestogether,butyouknowit’sworkingforyou,butit’snotrepeatable.It’snottrulyrepeatable.The

numbersaregrowingbutit’snotrepeatable.

Thenextkindofphaseis…Youhavetoblowthroughthat.Youjusthavetosuckitupaspainatthegym

becausewhat’llhappeniswhenyougettwiceasbig,usuallyliketwomillionARRassumingyourdealsize

issmall,maybeit’salittlebigger,maybealittlesmaller,onceyou’retheretheengine…Iguaranteethe

enginewillwork,whetherthat’sfivehundredcustomers,athousand,ahundreddependingonyourideal

size.


That’senoughthatyou’llhavearealenginethatyoucould,evenifyou’renotreadyforaVPofsales,we

canchatabout,atleastyoubringpeopleintoyourorganization.Youcanbringagreatheadofmarketing

in,agreatheadofcustomers’success.Twomillionisnotenoughtopaythesalariesofyourfullteamand

hireallthepeopleyouwant,butit’sreal,right?So,yougettheonemillionandyou’reseeingitinthe

numbers,andyou’reseeingitinthelogos,butit’snotanengine.

Twomillionandyoufinallygettheengine,okay?Andthenyou’relike,“Okay,it’sworking.Icanactually

spendadollarandmakemorethanadollar.”“IcanactuallybringLindaorBobinoffthestreetandthey

canactuallyclosesomething.”Thenthekeyis,andhere’sthethingthatIlearnedthatIdidn’tknow;

you’vegottogettotwototenasfastaspossible.Let’sjustdosimplemath.Ifyougettotwomillionand

youhavesomegrowthtoit,morethanfiftypercent,giveitenoughtimeyou’llgettospendmoney.You’ll

gettoscale.Ifittakesyoutenyearsyourdeadthough.Notonlywillcompetitionkillyouandmarket

changewillkillyou,butyou’llliterallydieofexhaustion.

Ifyoucandoitinoneyear,whichisincredibly…borderlineimpossible,ifyoucandoitinayearoreven

eighteenmonthsnomatterhowmuchpainyousufferthroughit’sallepic.Becauseonceyou’reatten

millionyouarefat.Youhaveextrapeople.Youcanhavesixtypeople,eightypeople.Youcanbringinten

ortwentysalesguys.Youcanhaveandextrafiveorteninextraengineers.Imeaneverybodyhastohave

anextraengineer.Oronceyougettoten-millionyoucanactuallyhaveawholeextrateamworkingon

coolnewstuffyoucanhave.

Soyou’vegottoget…onceyou’reattwo,you’vegottogettoten.Andtherealkeyisnottoburnout,

becauseifittakesyoufiveyearstogettoten-millionyouwillbetootiredandyouwilldie.Idon’tcare

howyoungyouare.TheothernightLeBronhadhisgreatestgameeveratagethirty,sixtysomething

pointsandthenightafterthathesaid,“I’veneverbeensotired.”Okay?Hemissedthethree-quarterto

tiethegameanditwasoneofhisworstperformances.Youcan’tdothat.Youcan’tburnout,right?And

burnouthappensifyou’repoor.

Eric:Gotit.

Jason:Andithappensagain,andagain,andagain,andagain,andagain.So,myreallearningis;attheend

oftheday,itdoesn’treallymatterhowlongittakesyoutogettoonetotwomillioninrevenue.It’dbe

greatifithappenedinaweek,orsixmonths,orayear,butthetruthis,itdoesn’tmatter.Whatmattersis

pushingasfastasyoucanfromtwototen,right?Sothatyoudon’tdieofpureexhaustion.

Eric:Gotit.Doyouthinkthisrule…ThisobviouslyappliestoSASS,itsoundslike,butdoyouthinkitapplies

toregularservicetypebusinessesortraditionalbusinesses?

Jason:Itappliestoanybusinessthathasreasonablegrossmargins.BecauseifyouhaveSASSlikegross

marginsthatareeightypercentorhigher,whatitmeansisthattenmillion,youcanspendeightmillionof

itonpeople,onhelp.Ifyouhavealowgrossmarginbusiness,ifit’stoserve,thisisbusiness,it’sforty

percentmargin,it’smathdoesn’tworkout.Ifit’se-commerce,wheretherealmarginsareliketwenty

percent,thanyouhavetomultiplybyfive.Insteadoftenmillionit’sgottobefiftymillion.SoI…Itdoesn’t

reallymatterwhetherit’strueBtoBSASS,butforthesesortofonetotwototennumbersthey’rekindof

dependentonthemargincontributionthatyougetata…Reallydoweneedsixserverstorunatenmillion

dollarbusiness?

Eric:Right.Gotit.So,oneofthebigthingsthatI’vealwaysbeenwonderingis,youguyshavebeen,oryou

havebeenreallyontopoftrackingallthenumbers.Youhaveallthesecoolgraphsandthingslikethat.

WhenIwasatastart-upaswell,weweren’tsupergoodattrackingeverythingsoIguess,howdidyou

guystrackthingswhenyoufirststarted,maybethefirsttwoyearsorso?


Jason:Attheendofthedaythere’sonlytwometricsthatmatter,ortwoandahalf:Revenuegrowthand

revenue;andhowmuchcashI’mbleeding.AndallthesewonderfulmetricsthatItalkaboutandoreven

wordsadnauseam;customerlifetimevalue,customeracquisition,cost,revenueperlead,Imean,they’re

allgreat;butifyourevenueisgrowingquicklyandyou’renotlosingmoremoneythatyoucan-noneof

thatmatters.So,thosearetherevenueswetrack,butthenyouwanttounderstandthesizebecausethe

realkeyisyougothrough.

Theonemostimportantphaseyougothrough,maybeithappenswhenyouhitinitialtraction,thattwo

millionnumber,maybeit’searlierlater,isonceyouactuallyunderstandhowyourbusinessworks.And

thenwhatendsuphappeningisyouhaveacoresetofuniteconomicsthatareplausible.

MycorecustomerIspendonedollarandIgettwobucksoutandthatyieldsxpercentofgrowth.Well,

maybeyoudon’tlikethatpercentofgrowth.Maybeonedollartogettwodollarsthatyields50%annual

growth.Thenyourjobasafounderistoaddthatextraincrementalcustomer.Thatmaybeitisadollarto

getadollar,orevenadollartogettwentycents,aslongasyourcoreuniteconomicsworks,that’sokay.

Soanyhow,Ithinkthatwecantalkaboutallthesedifferentnumbersandpipelinenumbers,andthings,I

thinktherealnumbersthatmatterareyourgrowthrate,yourburnrate,andthenthere’sthatcoreunit

ofeconomics,thecorecustomerthatprobablycostsalmostnothingtoget.Yougetitthroughwordof

mouth,orvirality,oryourbrand,it’sthatpositive.Ifthat’spositiveandyou’regrowingahundredpercent

youhavemagic.

Eric:Gotit.

Jason:Youlookatlike,whyisBoschspendinghundredsofmillionsofdollarsayearonsalesand

marketing,doesthatlooksstupid?Itmaylookstupid,butyouknowwhatthey’redoing?Bosch…we’llsee

theirexactnumberswhentheygopublic,buthere’swhatthey’redoing.They’rekindoforganic…Theyare

atahundredmillion,morethanahundredmillioninrevenueandtheyhave,whatI’llcall,anorganic

growthrate,Idon’tmean,literallyit’snowork,buttheengine’sworking,right?I’mgoingtosaythat’s

fiftypercentforthemnow,sixtypercent.Theywanttodoeightysotheywillspendahundredmillion

extratogofromsixtytoeightybecausethemultiplesjustify.Butitdoesn’tmeanthateveniftheunit

economicsareallofffromsixtytoeightythatcoresixtypercentgrowthisgood.Youneedgood

economicsthere,Iguaranteeit.

Eric:Gotit.Thattotallymakessense.Yeah,andit’skindofscaryhowthey’regoingheadtoheadwith

Dropboxtoo.YouactuallyhadapostonthetenmillionARRmark,andARRmeansrecurringrevenue,or

ARR’s

Jason:ARR’s,yesabsolutely.

Eric:Sowhy…Youhaveatrainthat’sgoingupinthatbloglist.Canyouexplainwhytenmillionisso

special?

Jason:Yes.WhatIlearned…IwishedI’dknownthiswhenIwasanentrepreneur,okay.WhatIlearnedis;

everythinggetseasieratten.Everything.Bythetimeyougettoten,atleastinyourindustry,yourlittle

segmentthatyousellin,everyone’sgoingtokindofrefertoyou.Justthinkaboutthemath.Let’ssayyou

gettotenmillionrightandyouraveragecustomerisathousanddollarsortenthousanddollarsayear.

Howmanycustomersdoyouhave?Athousand.Tenthousandcustomers.Andit’stakingyouacouple

yearstogetthere.Andthey’veheardofyouandthey’vetakenyoutotheirnewjob,andthey’vetoldyour

friends,andallofthis,andyou’vebeenheardof.Andsotheleadsjustcomein.Maybenotenough.It’sall

there.


Soyouhaveabrand.Andlet’snotdiscountthevalueofabrand.Thebrandisepic.Abrandiswhywebuy

aVMWbrand.BrandiswhywebuyanAppleproductthatwenevereventouchedit.Brandsmatter.

Brandsareproxyfortrust.Soyoucangetaminibrandmuchearlierthanthator…Somepeopleinthe

industryinTACorlikeOneSegment,butbytenmillioninyourrunrate,inyourbestniche,everyone’s

heardofyou.Okay?Soatleastyou’regoingtogetintoeverydeal.Youmaynotwineverydeal.Youmay

losethatdealtoyourscrappiersmallercompetitororyoursmarter…butatleastyou’llhaveaseatat

every…atmostdeals,okay?Sothat’sone.So,gettingintoeverydealiskey.

Two,here’sthething;tenmillionisfat.It’senoughfatthatyoucanhire…Let’ssayyou’redoingtenmillion

andyougroweightypercent.Thatmeansyou’regoingtoaddeightmillioninincrementalrevenuenext

year.Let’sassumeyouhaveahighmargin.ThatmeansIcanspendsixmilliondollarsonpeople.How

manyengineerscanyouhireforsixmilliondollars?

Eric:Aton.

Jason:Sixmilliondollars.That’swhyeveryonethathassomethinginordertoacceleratetotenmillion-

youcandoanythingwithsixextramilliondollars,right?

Eric:Yes.

Jason:So,youhavethebrand,youhavetheextramoney.Attenmillionyouhavesomanycustomersthat

thequestionis;howquicklydoyougrow?Butyou’reoutoftheperiodwhereyoucan’tbekilled,right?

Googlecan’tkillyou.Adobecan’tkillyou.Youknow…Salesforcecan’tkillyou.Salesforcemaybecankill

youwhenyou’redoingamillioniftheywanttothrowoutallthisspace,butattenmillionyouareun-

killable.Youcontrolyourfate.

Eric:Ilikeit.Cool.Soyou…There’salotoftalk…Imean,alotofyourblogpoststouchuponcustomer

success.Canyoukindofexplainwhyallthemoneyisincustomersuccess?

Jason:Yes.Andthistakesawhiletofigureout.So,yougetgoing,inyourfirstyear,howmanycustomers

haveyouhadformorethanayear?Zero,right?Andthenevenasyougetinto,like,thefirsthalfofyour

secondyear,youknow,monthstwelvethrougheighteen,thinkaboutgoingbackayearintime,yourvery

firstsixmonths,howmanycustomersdidyouget?Barelynone.

Soittakespeopleabouttwoyearstoevenunderstandwhattheheck’sthepointofinvestingincustomer

success?Becauseobviously,onthesurface,itseemslikeapointlesswasteofmoneyinyourfirstyear,

whichitisn’t,we’lltalkabout.Andevenbytheendofthe…Ittakesyouinthesecondyeartohaveenough

customersthatyoucouldreallyseeaquantitativeimpactfromcustomersuccess.

ButwhatIlearned,andthenwecantakebackaroad,butwhatIlearnedabouttwoyearsin,okay,was

justwhatIsaidbefore;wegoteightypercentofourgrowth,fromourexistingcustomersandthat

constitutesbothviralandwordofmouthandthebrand,butalsoimportantlyup-sales,upgrades,buying

morefromyou.Andhere’sthesecretsaucethere.Ifyourcustomerlovesyoutheywillbuymorefrom

youelectively.Ifyourcustomerhatesyou,butisforcedtouseyourproductanyway,right,likeUnited

Airlines.IwillstillflyUnitedifit’stheonlyreasonablewayformetogettoNewYork,butIwillnever

electivelyflyUnited.IwillalwayselectivelyflyJetBlueorUrgent.

So,ifyoubuildthisattitudinalroyalty,okaywhereyourcustomersloveyou,youwillgrowanothertwenty

percentbecausetheywillbuymore.Andtheywillchurnoutatamuchslowerrate.Now,wedidthismath

andIreallyfeellikeonceIgotmyselfrealdeeplyinsalesandhadanenginegoing,Ifeellikewehadthe

bestsalesteamintheSASSintermsofefficiency.


Havingsaidallthat,withthebestteamoncewehitfour,fivemillioninrunratewestillcouldhavegrown

literallyeightypercentayearwithoutanytraditionalsalesjustbymakingourcustomershappy.Westill

neededsomebodytogive…westillneededasalesteam.ButwhatImeanis,thesalesteamcould’ve

focusedjustoninternallygeneratednewrevenueandstillgroweightypercent.

That’sthemagic“A-ha!”Andso,whatyou’reseeingtodayisfolkslikemewholearnedit,especiallyfor

companiesthathaveenoughfunding,butevenifyoudon’t,you’reseeingthembringonacustomer

successorcustomerhappiness,ifyouwanttobeserious,aucourantofficerslikeliterallywiththefirstten

customers.Iwasthecustomersuccess,theVPcustomersuccessinthebeginningandthenwehadan

internwhoturnedouttobegreat.

Butyou’vegottojustshowerthemwithloveforthefirstday.Andtheninyearthree,here’sthetough

part;itpaysoffandyou’refreebecauseofthemathwetalkedabout.You’vegottomakethatinvestment

nowinsecurerevenuesothatallthatloveandallthatwordofmouthandvirality,andupgrades,andup-

sales,andallthisstuffthatIcallsecondorderrevenue,becauseitcomesoutofit.Secondorderrevenue

areseedsyouplantandyouharvestinyearthree.ThisiswhyyoulookatalltheseSASScompaniesand

they’vebeenaroundforalongtime,likesevenoreightyears,thenyou’llturnaround,butthenitjustgets

epic,oncetheseseeds…theycanreallyharvest?

Eric:So,whenyousayharvestareyousayingthey’reactuallyup-selling?Isthatwhatyou’resaying?

Jason:Up-sale,up…andthey’lljustwanttobuymorefromyouiftheyloveyou.Becausethethingis,if

youmakeitthroughfouryearsyourproductwillgetbetter[laugh].Andsoonewayoranother,whether

it’sthembuyingmorelicensesacrossthecompany,orthembuyingmoremodules,oreditions,or

whatever,basicallywhathappensis,outsideoftheverysmallbottomofthemarket,everygreatrunning

SaaScompanyhasnegativechurn.Negativechurn.Andthetypical…ThenumberIsetforourteamand

thatwehit,wasahundredtwentypercent.

Eric:Wow!

Jason:—Organicgrowth.SoeveryyearifIbuyintheendoftheyearwithafourmillionbase,my

customersuccessteamwasnotjusttokeepthatfourmillion,buttogrowthattwentypercentinthenext

year.Theyhadtoturnthatfourmillioninto4.8thenextyear,inclusiveofchurn.Includingchurn"Wow",

right?Andallthegoodteams,theycanallachievethat.So,that’sjustaverynarrowdefinition.That’snot

newleads.That’snotvirality.That’sjustliterallytakingthecustomersthatlovemeandthemwantingto

buythirtypercentmoregrossbasis,twentypercentonthenetbasis,itallwillhappentoanyoneifyoudo

itright.Butittakestime.

Eric:Gotit.

Jason:Becausethey’vegottotrytheproduct,they’vegottoliketheproduct,they’vegottodeploythe

product,they’vegottobecomfortablewiththeproduct,andthey’vegottogetmoreusersonthe

product,andthenthey’vegottogetreadytobuymore.Thefastestthatreallycanhappenisliketento

twelvemonths.

Eric:Imean,ifthere’sanytestamenttowhatJason’ssayinghere,likewe…Ihaveaservicebasedbusiness

andwestartedimplementingtheclientsuccessmanagersorcustomerservice,whateveryoucallit,it’s

startingtowork.We’restartingtogetreallygoodfeedbackfromit,butagain,likeJasonsays,ittakes

time.So,Ithinkitdoesapplytoalmosteverysinglebusiness.It’sjustanobrainer,right?


Jason:Ithinkwhatmost,sortofBtoBentrepreneursarebetterattodaythanwewerewhenwestarted,

thebestones,isthey’remorepatient.Wewerenotpatient,okay?Wewantedtoachieve…Wegave

ourselves,sortof…andthiswasin2006whenthemarketswerehundredsofsizes…ittookaboutten

monthstogettotwomillion.

Eric:Wow!

Jason:Weweren’tpatient,right?Andwedidn’tevenknow…HonestlyIhadtolearnhowtobepatient.

Eric:Ithinkmostentrepreneursaren’t.

Jason:They’renotpatient.Buttosomeextentwewereimpatientinthewrongways.Andso,today

there’remoreexamplestolearnfrom.Andso,customersuccessisallaboutpatience.Becauseifyou’re

givingyourselfonlytenmonthstomakeit,ortwelvemonthstogettothreemillioninrevenue,there’sno

pointininvestingincustomersuccessbecauseitwon’t…itcan’timpactyou.Butthesma[rt]…thegreat

entrepreneurstodayarethinkinginseventotenyearsintheirfirstperformance.

Eric:Whichisgood.Thelonggameisgood.Doyou…So,questionfortheaudience,Ithinkthiswouldhelp

them.Doclientsuccessorcustomersuccesspeoplegetcommissionsfortheup-sales?

Jason:Yes.Theyshould,right.Butit’sacomp[licated]…Everythingabouthowyoustructurethe

organizationintermsofordering,howdoyoucompensatecustomersuccess,it’snotasclearcutasitis

withsales.Infact,youknow,IspokeatTreeForestwiththeCOofGainsight,whichisacustomersuccess

softwarecompany,hewasVPcustomersuccessatMarketo,longtimeexperienceinthisindustry,andhe

didtwelvedifferentorgchartsofpiestructure,acustomersuccesssignaturehadacustomersuccess

reporttotheCO,ortheheadofsales,ortheheadofthis,tomarket;there’snoperfectanswer

unfortunately.Becausehere…

Let’sstepbackforaminute.Let’stalkaboutthechallenge,let’stalkaboutthesolution.Thechallengeis

youhavetodecidewhatbehavioryouwanttopresent.There’sonethingIknewIdidnotwantinmy

company.Ididnotwantusedcarsalesmenincustomersuccess.Andtherearealotoftheseguys

especiallyoldschoolguys.Sometimesthey’recalledaccountmanagersorwhatever,theseareguysthe

customerneverheardofandonday362beforethecontractisupforrenewalallofasuddenMarvin’s

there.“Marvin.Myname’sMarvin.Iknowwe’venevermet,butyourusageviolatesourtermsofservice

andyou’renotusingourcrappyotherproductyoueverheardofandI’dlikeyoutobuyanotherten

thousanddollarsofmyproductthisyear.”Right?

Ijustfeltlike,eventhoughtheyhaveagoodnetwork,Icouldneverworkthatcompany,anditwouldnot

createthisattitudinalroyalty.SoIknewIdidn’twantthatandalotofcompaniesdothat.Theydothe

hardsellonday360andmorepowertothem.But,Idon’tthinkit’sthenumberoneapproach.Butifyou

havethosedudes,whatdoyoudo?They’rejustsalespeopleonyourexistingbaseandyoujustgetgive

‘emaregularcommission.Themajorityoftherevenuesisgoingtocomefromcommission,orhalf,right?

Butthatdoesn’tbuildthekindofrelationshipswe’retalkingabout.So,youknow,thekindofratiothatI

cameupwithwasasfollowsisaneighty/twentyformula,soeightypercentbasesalary,twentypercent

bonustarget,andthatwastiedtothathundredandtwentypercentnumber.Wesegmenteditbygroup.

So,generallyspeakingifyoutook...Let’ssayyou’reacustomersuccessmanagerandyoumanagetomake

amillioninrevenue.Yourjobistogetitto2.4,Idon’tcarehowyougetitdone.Butifyoudon’tbuild

goodrelationshipswithyourcustomers,theywillchurnandyou’lltotallyscrewitup.Right?Andifyou

selltooharditwon’tworkeither.Andit’snotsomuchcommissionthatyourincentiveistodonothing

aboutthat.Andthatmeant…whatIchosewasatotaltargetforyourwholebase,whichiswhatmost


peopleendupdoing,andhavethecommissionbematerial,youknow,twentypercent,butnotsalesit.It

seemstowork.Itseemstobewhatmostpeopledo.

Andthentogetintothenittygritty,thequestionis,butwhatiftheydosomethingthat’smaterialorwhat

iftheyjustdon’tgrowtheirbasetenortwentypercent,buttheyaddamilliondollarsinrevenue?Turns

outIthinkwhattherightansweris,isthis,whichalotofcompaniesdo,istheybasicallysay,ifadealisup

to…Ifandupgradeisuptoacertainsize,saytwentypercentoftheinitialgrowth,saytwentythousand

dollarayearcustomer,iftheybuyuptotwentypercentmore,uptotwothousand,thecustomersuccess

justhandlesit.Nosalespersonsinvolved.

There’snodirectcommission,okay?Andassoonasit’saboveanumber,itcouldbeahundredpercentof

thedeal,itcouldbetwenty,itcouldbewhatever,thencustomersuccessbringsinsaleswhetherthey

wanttoornot.Andtheymaynotwanttobecauseoftherelationship,buttheyhaveto.Andso,lateron

whenyougetmoresophisticated,Ireallylikethisideaofdrawingthisbrightlinebetween…belowthe

minimalstructural,youknow,itstayswithcustomersuccess,nodiscounts,nogains,it’sjustlistprices,so

it’snotthatmuchmoney.Right?“AndI’lljusthelpyouGeorge”right?Andnoneofthatsalesmoneyhas

tocomeback[laugh].Butwhenit’saboveanumberandyouactuallyneedsalesexpertise,saleshastobe

involved.

Eric:Yup.Gotit.Makessense.AndIthinkyouhadinonepost,youtalkedaboutacertainpercentageof

revenuesgoingintocustomersuccess.Whatpercentagewouldthatbe?Ithinkyousaid…Whendoesthis

happen?Likethreeyearsin?Whendoesthishappen?

Jason:Youmean,howmuchshouldyouspendonit?

Eric:Yes,thatisthequestion.

Jason:Youknow,it’sgoingtodepend,butroughlyspeakingyou’regoingtowanttospendtentofifteen

percentofyourrevenueprotectingthatrevenue.Andyoucankindofbackintothatnumberinasense

that…Thereisaslightlymisleading,butusefulindustrymetricofonecustomersuccessmanager,one

humanbeingcanmanageabouttwomillioninrevenue.Andjustthinkaboutit.

Let’ssayyouhaveamilliondollarcustomerwhichisabigdeal,butIjustwantoneortwopeople,Iwant

thatguyorgaltoonlywinthatcustomerandoneotherright?Let’ssayyourcustomerisundertwenty

thousanddollarpricepump.Maybethispersoncouldhandleahundredcustomerstotal.Thatmeansthey

canbedraftedwithallofthem.Theycanvisitmostofthemifthey’relocal.Anyhow,ifyouthinkaboutit,

twomillioniskindofrightacceptthat’s…Youwannadoitinadvance,onarrears.Youdon’twanttoget

pasttwomillionbecausethentheguy’s…theperson’stoobusy.Soreallyit’sprobablymorelikeamillion

tomillionandahalfforcustomersuccessmanager,okay?

Eric:Gotit.

Jason:So,youknowitsadvanceonarrears.Solet’simaginethatit’samillionandahalforamilliontwo.

Takethefullyburnedcostofthatperson.Let’ssaythefullyburnedcostishundredthousandwith

benefitsandcoolmacro-careandthebrands,andmaybeit’smore,it’smore,right?Thataloneisgoingto

beclosetotenpercentofthebusinessthatthey’reprotecting.Andthenyou’vegottogivethemmoney,

andyou’vegottogivethemcollateral,andtime,andallthis,soyouit’sgottobefifteenpercent.

Eric:Gotit.


Jason:Soifyoukindofbudgetthatin,youknow,sincethisismymost…myhighestmarkingcustomerthis

isallthesourceofmysecondorderrevenue,let’sspendatleastfifteenpercent,makingsurewedon’t

loseit.Andyou’llseethatmanyolderschoolcompanies,andmanypeoplethatareintoprofitspendfar

less,likefivepercent.Andthat’stheworstinvestmentyou’reevergoingtomake.

Eric:Gotit.Fifteenpercentguys.Cool.

Jason:Andmaybealotmoreintheearlydaysifyou’rewell-funded.Maybeifyou’rewell-fundedinthe

beginning,it’sthesinglebestinvestmentyoucanmake.

Eric:Canyoudefinewell-fundedfortheaudience?

Jason:Wellcompaniesthatareraisinglotsofmoney,likeeightortenmilliondollarsearly,ifyouableto

dothatsomehow…Iwouldhirefourcustomersuccessmanagersthenextday.Showeryourcustomers

withlove.Evenatamillioninrevenue.Wejusttalkedaboutthismetricoftwomillionpercustomer,but

it’sreallymorelikeamillionandahalfonadvanceonarrears,butifIonlyhadamillioninrevenue,that

mathsaysyouneedoneperson,right?

Eric:Yup.

Jason:IfIhadeightmillioninthebankIwouldhirefour.

Eric:Okay.

Jason:Sothattheyjustgetthosefirstcustomersjust…alltheirneedsaremetnomatterwhat.Andifyou

lookatthesewell-fundedcompanies,theymayhaveacrazynumberofsalespeoplemaybetoolittle,too

few,theremaynotknowwhatthey’redoing,buttodaythey’vegotfourcustomersuccessmanagers.

Eric:Wow!

Jason:Okay?

Eric:Yup.Idon’tthinkalotofpeoplerealizethat,buthereyougo.Cool.Let’sswitchgearsalittlebit.Let’s

talkaboutsomethingthatalotpeopleask.Ithinkyougetaskedthisquestionalot.Whenshouldyouget

aVPofsalesandhowdoyougetagoodone?

Jason:Yes.So,thefirstoneseasiertoanswerthanthesecondone,althoughthey’rebothmorenuanced

thananyotherpositionyou’regoingtohire,okay?YoushouldhireagreatVPofengineeringbeforeyou

startquitting,becauseyoucan[laugh].YoushouldhireagreatVPofmarketingassoonasyoucanafford

togetone.Even…Whynothireoneatten-thousanddollarsamonthinrevenue.IhiredmyVPmarketing,

who’sinsanelygreat,nowshe’sVPmarketingandweweredoingtwenty-thousanddollarsamonth.AndI

didn’tloseadollar.

Youcan’tgowrong.TheVPofsalescangowrong.Forgetaboutthefactthisisthemostexpensivehireon

paperyou’reevergoingtomake.Youbringthispersoninbeforeyouhavearepeatableprocess,itnever

works.Itneverworks.Andsowecantalkaboutwhy,butthebottomlineis;untilyouhave,generally

speaking,untilyouhaveatleasttworepsthatarehittingaquotaandyouhaveanenginegoing,ifyou

bringinaVPofsalesitwillbeatrainwreckninetimesoutoften.

Soyoubackintothatwhenwetalkedaboutourstagesbefore,ifyoubringinaVPofsalesbeforeeven

onetotwomillionofreferringrevenue,it’sarealVPofsales,youhaveaninetypercentgrowthrate.So


whatdoyoudo?Youkindofhavetwooptions,thatifyouhavetheskillsyougettwotothreerepsupto

thatlevel,getthemgreat,getthemgoing,thenbringintherightperson.That’stherightwaytodoit.And

that’swhatyoushoulddo.That’stherightanswer.

Havingsaidthat,whatifyoulacktheskills?Whatifyouareliterallydonot,nomatterhowmuchyoulike,

noneofthefounders,andthisissad,butitdoeshappen,noneofthefoundingteamhastheskillto

managetwotothreefolksselling.Andtodothat,stepback,youhavetosellfirst.Becauseifyoucan’t

close,andIclosedallofourfirsthundredcustomers,ifyoucan’tdoityourself,how’reyougoingteacha

twenty-fouryearoldkidhowtodoit?Youcan’t.

So,you’vegottoclosethemandthenyou’vegottoteachtwopeoplehowtoclose.Andyou’renot

possiblytrainedinsales,sothere’sahugelearningcurveforyou.Soyou’vegottogetthatteamofthree

whichisyouplustwo.Youhavetodothat.Butwhatifyoucan’t?Thenyou’reinthishyperriskyphaseof

hiringaVPofsaleswaytooearlyandthisisthepersonIcalltheevangelist,andthey’renotreallyaVPof

sales.Theyaresomeonewithexperience,usuallycharismaticandverysmart,theycantalkthegame,

theycandowhatyoushouldbedoing,asafounder,butlacktheskillstodo.Sohirethatpersonasyour

secondbest.,butjustbearinmindthatevangelist,thatsupercharismaticpersonthatyousendoutto

attractthatten-thousanddollars,thatpersonwillneverscaletobetheguythatmanagestwentyreps,

zerooutofahundred.

YoumayhavetotransitionthatpersontoaVPofBusinessDevelopment.Itdoesn’tmeanyou’vegotto

getridofthem.Itjustmeans;thatmagicalguythatcancomeinwithnorepsunderthem,nothing,anddo

thismagicalstuff,isnotthesamepersonthatcanhireyourfirsttenrepssuccessfully.Zeropercent.So,

justbearthatinmind.

Eric:Ithinkyoualludedtothis,thatthisistheindividualcontributorthat’sreallygood,but…

Jason:AndtherelasttitleattheirlastjobmayhavebeenVPofsales,butusuallyitsevangelistwhenyou

reallypickthroughit,“Sohowmanyofthoseeightguysthatyoumanagesinceyouhired?”“Well,Ireally

didn’thirethem.Iinheritedthem.”“Wellwhatdoyoumeanbysalesrep?”“Itwasmoresalesoperation

thansalesstrategy.Ireallymoreworkedwiththeeightreps.”“Ahha…”Right?

AndthatgreatVPofsalesthathiredeight,ten,ortwentyrepsandbuiltareallyefficientengine,that

person’snotgoingtocomeintoyourtenthousandamonthrevenuefromscratch.That’snotwhatthey’re

goodatandtheydon’twanttodothat.Sometimes,butthey’llcomeundertheten-thousanddollara

monthrunratecompanywhentheyhavetenmillionusers.

Eric:Yup.Thatmakessense.

Jason:They’llcomeinlikemyVPsalesdid,thefirstsalesmanageratLinkedIn,whenitwasallself-service

business,liketherewasnorealsales,buttherewerealotofusers.

Eric:Andtheycomeinandtheyfigureitout.

Jason:Theyfigureitout,butatleastthere’sthebase.NogreatVPofsalesisgoingtocomeinwithno

base,nothingtoworkwith.WhatthegreatVPofsalesdoistheyhireandtheyincreasetherevenueper

lead.Theydon’tfigureoutwhetheryouhavemarketproducts.That’showtheydoit.That’swhatItell

Judith.

Eric:Samethingwithhiringamarketertoo.You’vegottohaveproductmarketfit.


Jason:Youdo.Youdo.ButthepointisyouhirethisVPofsalestooearly,they’regoingtoflameout.You

highertheVPofmarketingeven…Aslongasyouhaveahundredcustomers,aslongasyouhavetimeand

money,it’sgoingtobeokay.Aslongasthere’ssomethingtheretoworkwith,rawmaterials.

Eric:Iagreewiththat.Cool.Intermsof…Doyouhaveanyprocessforsettingquotaforpeopleor

like…Howdoyousetquotaforsalesteams?I’lljustputitthatway.

Jason:Let’sstepback.Therearecertainindustrynormsthatareveryusefultoreferenceandthere’swide

bands.Buttheroughindustrynorms…laterwhenyou’reatscale,whenyou’repasttenmillioninrevenue,

everythingkindof…pastamillioneverything’skindofthesame.GivenanACD,atagivenaguildsize.

Maybeevenpastthreeorfourmillioneverything’sthesame.Companiesthatselltwenty-thousanddollar

ayearproductspastthreetofourmillion,theyallhavethesametypeofsalesstructure,thesametypes

oforganizations.Companiesthatareahundredthousandarethesameandcompaniesthataresortof

lowendorself-service,oncetheyareallthreetofivetofour,theyallenduplookingthesame.

Solateryougetbracketedintothefollowingquotas.Thebigenterpriseguysgetmilliondollarquotas,but

maybelaterit’stwomillion,butonetotwomillion’sahugevariance,but,youknowamillion.WhatIcall

andsomefolkscallrunratewraps,thatsellfour,five,six,eight-thousanddollarayeardealsendupwith

quotassortofinthefourorfive-hundredthousanddollarrange.Andtypicallyguysthatselltothevery

smallbusinessesendupwithquotasthataresortofinthetwotothree-hundredthousanddollarrange.

Okay?

Sothat’swhereyou’regoingtoendup,Andyou’regoingtoenduppayingthoseguysapercentageof

thosenumbersbackasontargetearningcommissionplusbase.Sothat’swhereyou’regoingtoendup.

Thequestion’s;howdoyougetthere?

Eric:Yup.

Jason:Right?You’regoingtokindofendupwith,intheverybeginning,youhavetopaypeoplealiving

wage.Ifyoubringyourfirsttworepsinandtheycan’teatandtheydoagoodjob,like,what’sthepoint?

SowhatIdidinthebeginningwithourfirsttworepsinthebeginning,whenweweregettinggoingis;allI

wantedinthefirstninetydayswasforthemjusttocovertheircosts.Thatwastheirquota.

Soyou’reinitialquotaisahundredgrandandthenitscalesuptothosenumbers,threehundredthousand

orwhateveritis.Butithas…Youwantyourreps,ifthey’redoingagoodjob,youwant…theyhavetobe

successful,theyhavetofeelsuccessful,soyouhavetoengineerquotasandtalktargets,thatifthey’re

goodtheycanhititandtheycanseeitandiftheydon’t,ImeanIknowpeoplethathavehadsuccesswith

impossiblegoalsinthebeginning,butIfindthattotallydemoralizing.

Eric:Gotit.

Jason:Or,letmeputitdifferently.Iwroteapost,like,yourbestrepyouwantdrivinganM6convertible.

Eric:Yup.

Jason:Inhisfirstyear,“Weoughttowrapthosetwenty-four…”youknow,oncehewasunleashedfroman

SVRintoanindividualwrap,youknowinsixmonthshehadtheMercedesconvertible,andthenaround

monthfourteenitwasthenewM6convertible.That’swhatyouwant,right?Thatmeansyourcompline’s

working.IfeveryonehasanM6convertibleyouhaveaproblem.

Eric:Totally.


Jason:Butaftereighteenmonthsno-onehasaM6convertibleandthey’reallsayingit’snotaboutthe

money,it’saboutthejourney,you’redead[laughter].

Eric:Ilikeit.

Jason:Salesisaboutmoney,right?Salesfromthestart-upisaboutmakingmoneyandenjoyingmaking

money.Salesinthebigcompanyisjustaboutmoney.Inastart-upit’sabouthavingachancetomakea

lotofmoneyandnothavingajerkbossandhavingfundoingit.Beingpartofagreatteam.Ifyougointo

SASSstart-ups,anystart-upthatareliketenmillionoraboveandgrowingwell,andyoumeetwithteam,

you’llseejustthisincredibleenergy.It’sjustwonderfulandbuildsonitself.

Eric:Yup.Iactuallyhadafriendwhodidsales,itseemslike,ifyou’regoingtohiresalespeoplethey’re

goingtohavereallyexpensivetastesowhenyouinterviewthemyoushouldaskthemwhattheirtastes

areor,youknow,whatkindofcardotheywanttodrive,right?

Jason:Yes.

Eric:Ithinkyoualsosaidthattoo.

Jason:Yes.Iliketheoneswithexpensivetaste.TheoneIreallydon’tlikeistheguythatdrivesthesixyear

oldMercedesE63.Okay?Thatman,sixyearsagohethoughthecoulddriveanAMGMercedes,butnow

it’sgotalotofdentsandthere’salotlikeBigGulpcupsinthebackandallthat.Irunfromthatguy.

Eric:Gotit.Cool.Makessense.So,actuallybacktrackingalittlebit.Yousaidthatinthefirstninetydays

theyshouldbeabletocovertheircostsyousaidahundredgrand.

Jason:Yeah.

Eric:So,wouldthatbenetorgross?

Jason:Well,Imean,youknow,lateritshouldbeinclusiveofallcosts.Inthebeginningwhenyou’resmall,

whenyou’reastart-up,justtrytomakethemathwork.

Eric:Okay.

Jason:Defineitinthemost…Justmakehersuccessful.Sodon’tplayanygames,likeliterally,ifyoudon’t

haveanengine,sayallIwantyoutodointhefirstninetydaysisclosewhatever,tenthousanddollarsof

newbookings,makeiteasyandthenmakeithard.Whenyouhaveoneortwosuccessfulpeople,you’ll

haveanintuitionthere.Butsetthe…makethebarachievableforthatfirstpersoninthefirstninetydays.

Eric:Gotit.Afewmorequestionshere.Ithinklikethreemore.So,andthisisfunny;youactuallyalluded

topayingthemoff…makesureyoupaythemabaseandthengive…givingmostlyabaseandthena

commission.AndthisissomethingthatAaronRosssaidwhichwewilltalkaboutinasecond.So,yeah,

actuallyjusttalkaboutitrightnow.AaronRoss,formerdirectorofsalesatSalesforce,Iknowyouwere

workingonabookwithhimrightnow…

Jason:AaronandIknoweachotherrallywell.

Eric:Canyoutalkaboutwhatyouguysareworkingon.


Jason:Aaron’smisterpredictablerevenue,butit’ssortofasequeltowhathe’sdonein“Predictable

Revenue”

Eric:Gotit.

Jason:So,itshouldbegood.It’sgoingtotieintothethemesthatIhave,whichinsomeways,arebroader

themesaboutrecurringrevenue.Totieinsortofwithhisnextgenerationthesisandviews,taking

everythingthathe’slearnedverysuccessfullyandtakingittothenextlevelonthesalesside.

Eric:Gotit.Sototheaudience“PredictableRevenue”,that’samustreadsalesbookifyou’rebuildingan

organizationandIthinkthesequelisdefinitelyamustreadalso.Also,Jason’sblogaswell.What’sone

mustreadbookyourecommendtoentrepreneurs?

Jason:Ohgoodness.Nowyougavemethetopquestionofthehour,right?Idon’tknow.Itellyouwhy.In

allhonesty,andAaronisgreat,he’saperfectexample,right?Ishouldknowthatanswer.

IstruggledasanentrepreneurwhenIwasbuildingmySASScompanygettingtosomething,youknow?In

thoseyearsfromthesixtillnineIcouldn’tfindthebook.SoItriedtoproducethecontentonQuoraon

SasStrtoprovidemyguides,right?IwishIknewtheperfectsource,butIdefinitelywouldincludeAaron

inthattopfivetoreadgroup,right?IwishIhadtheotherfourandaskmeinayear.Ijusttryto

contributesomeofthatcontentbackbecauseIcouldn’tfindit.

Eric:Mmhmm.

Jason:IwishIhaditbecauseIwouldhavereadit.There’salotofgoodcompanybuildingstyle,right,and,

youknow,butthere’sonlysomanybiblesonhowtoscalerecurrentrevenue.

Eric:YouknowIthinkthereallyinteresting.

Jason:Tellme.

Eric:No,Iagreewiththatbecauseit’sreallyhard,ImeanbeforeIreadAaron’sbook,andbeforeIread

yourstuffthere’sreallylittleinformationonhowtobuildasalesorganization.Andalotpeoplearejust

like,“Oh,wedon’tneedsales.”Andthenthere’sthisthoughtuptherelike,“Oh,wedon’tneed

marketing.We’rejustgoingtoletitgroworganically.”whichtotallydoesn’tworklikethatforthemost

part.So,Ithink,yeah…

Jason:There’salotofsalesmanagementstuffwhichisfocusedononetrafficpostscalemanagement

theory.Butwhenyou’redoingsomething,Ireallydon’tneedtohearalotsalesmanagementtheoryon

thehundredmillionoronebillionfromtheSVPofsalesoperationstotheSAP.Itjustdoesn’thelpme.

Eric:Totallymakessense.Intermsof…What’saproductivityhackthatyouuse?

Jason:Mytopproductivityhap,becauseIwroteaboutit,wasforme,ontherevenuesideatleast,was

onethatpeoplethoughtwasnutty,butnowmorepeoplehaveadoptedit,whichwas;creatingasales

commissionplanthattotallyalignedinterestwithmeandthecompany’sfund.WhatIdidwas…WhatI

learnedwas…andyoucanfindtheexactplanatSasStr.com.

WhatIlearnedisthatwhenIdidthisanalysis,Iwishtherewastheperfect[proof]backthen,butwhatI

learnedattheendofthedaymostsalescompplansbasicallytargettwentytotwenty-fivepercentofa


deal,uptothirtysometimesifit’sattheverybottommarketSandP,twentytothirtypercent,really

twentytotwenty-fivegoesbackoutasbonusesandcommissions.

So,Iknewthatwaskindofthewaythatthewaytheworldhadworkedoutovertime,that’sanatural

organicpattern,andthenIknewthisotherthingthathappened.WhenIhadmyfirstVPofsales,who

almostranthecompanytotheground,whichwaswhenwehemorrhagedcash.So,hecameintookthe

tworepsthatIhad,whichweregreat,andwouldhiretenpeopleandwithinahundredandtwentydays,

ourproductivityhadfallenfiftypercentandwewererunningintotheground.

Eric:Wow!

Jason:Anditwasn’tthat…Ididn’tknowwhattomakeofitoffigureout,right?ButIsawsomethingwhich

Ireallyhatedhappening,whichwaswhenhehadbroughtinatraditionalsalescompplanfrom

Salesforce,whatIsawis,whenyoucombinethatwithBminusreps,Ihadabunchofpeoplecomingin

theofficesellingalmostnothingandlivingofftheirbase.Okay?Sotheywere’nt…So,theonethingIknew

isIdidn’twantanybodytoliveofftheirbase.Ijustwantedto…OntheotherhandIwantedthefolksthat

killedittomakeaninsaneamountofmoney.TheotherthingIhated,fromthebigcompanysalescomp

planwaswhatweredecelerators.Theideathatifyoudotoowell…”EveryyearI’mgoingtoraiseyour

quota,dude,becauseyoudidsowell.”I’dgetupandIdidn’tlikethat.Isaid,“Listen,ifyoumakethe

companyhalfamillionthisyearandamillionnextyear,I’mgoingtopayyoutwicenextyearasmuchifI

can.”

Eric:Ilikeit.

Jason:Ihatedtheideaofraisingthebaronpeoplethatwerekillingit,right?AlthoughIgetwhyyouhave

todoitinalargeorganizationsoIsaid,“Okay,howcanImake…haveno[tax],nodecelarators,nogame,

nostupidity,andalsonothavethelosersthatI’mstuckwithlikelivingofftheirbasesalary?Becausegreat

folkswillleavefortheirbase,buttheloserswill…iftheycanmake80Kayear,it’snotthattheydid

anothergreatjob,sowhiletheyspinintheircubeorattheirdeskjusttryingtocloseanything.

So,anyhow,that’swhatItriedtoaccomplish.So,theplanthatIcameupwithwasbasicallythis:youpay

backyourbasebeforeyoumakeadollarincommission,yourfullyburdencost.So,ifyourbaseis60K

annual,you’vegottobasically,andsaythat’s5Kamonth,right?You’vegottobringinsixorseven

before…youdon’tmakeanymoneyonthosebookings.

Butthenyoutakeabigchunkofwhat’sbeyondthat.So,insteadoftakingtenpercentorfivepercentof

what’sbeyondthat,I’mwillingtofigureoutwhatthemathematicalmaximumthatIcangivethem,and

it’sperhapsliketwenty-twopercentorsomethinglikethat.Andsothatmath,youknow,ifyouattheend

bringinamilliondollarsinbookings,you’llmakeahundredtwentythousand,forsomebodyelseiswas

twenty-fivepercent,they’dmakeaquartermilliondollars.Ineedtwomillion,that’shalfamillion.Andso

thefolksthatkilleditmadealotofmoney.

Here’swhatIknewasafounderCO,ifhebringsintwomillionisthereanywayIcanlosemoneyinmy

company?Impossible.Iknow…Ididn’tevenhavetoworryanymoreaboutincen[tive]…sosales…here’s

theprofoundthing;saleswentfromacostcentertoaprofitcenter.AndIdidn’tevenneedtolookat

anything.Ididn’tneedtoseethedumbreportsorloggingthesales,itdidn’tmatterbecauseIknewthat

thosesalespeopleweredrivingtherevenueperleadup.That’sallIcaredaboutwasrevenueperlead.

AndIknewitwasacredence.Iknew,foreverydollarthattheywrotein,Iwasgivingthemlessthana

dollar.Nomatterwhat.Andallmyworrieswentoutthedoor.

Eric:Ilikeit.I’mgoingtohavetore-readthat.


Jason:Ididn’tcare,right?Buttheykneweveryincrementaldollar.Theymademore,andasafounder,

andanequityholderImademorebecauseIaddedvaluetothecompany.So,gogetyourM6convertible.

Thedudeistotallycool.Enjoy[crosstalk]

Eric:Thisisinthebookright?

Jason:IthinkAaron’sgoingtohaveitinthere.Whenyou’reinabillioninrevenueitdoesn’twork.It

doesn’tworkforAdobe,butyou’reafoolifyoubringinthissalesforcecompplan,andSalesforcemay

haveimproveditsincethen,IloveSalesforce,butbringingthatintoyourtwomilliondollarcompanyisa

recipefordisaster.

Eric:Gotit.So,Jason,thankssomuchfordoingthis.Alotofinsighthere.Irecommendpeoplewatchthis,

re-watchthis,andthengoJason’sblog,readeverything.Read“PredictableRevenue”twiceandyouwill

beasalesmaster.So,Jason,thankssomuchfordoingthis.Wehopetohaveyouontheshowagain,

sometimesoon.

Jason:Yeah,thiswasgreat.Perfectstuff.

ge 17: the sales process that grew echosign to $100m in ... · the sales process that grew echosign...

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