Subscribe
Share
Share
Embed
What does it look like inside the engine room of a hypergrowth company?
That's exactly what we discussed with Arun Mani, CRO at Pleo.
That's exactly what we discussed with Arun Mani, CRO at Pleo.
Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: Everyone, this is Toni Holbein From Growblocks. You're listening to the Revenue Formula. In today's episode, we're going to talk about how to manage hypergrowth with Arun Mani from Pleo. Enjoy
[00:00:13] Arun: You know, I keep confusing who is Mikkel, who is Toni. Who is Mikkel, by the way?
[00:00:23] Toni: we go. You know, I think that's what it was. Was that the intro then? Is it? Is it confusing because of the lack of hair? Both of us? Probably. That's, that's probably the reason. Toni is the guy with the shirt all the time. And I'm the person with the glasses.
[00:00:34] Yeah, that's right. Yeah. That's it. That's it. Anyway, maybe other viewers have the same problem. You know, who knows? Who knows?
[00:00:40] Arun: Yeah.
[00:00:42] Toni: So Mikkel, whom are we, whom are we having as a guest here today? We have
[00:00:45] Mikkel: Arun, from Pleo, CRO at Pleo. Arun, welcome to the show. Wonderful to have you.
[00:00:50] Arun: I'm super excited. Thank you, guys.
[00:00:52] Mikkel: So you are working at Pleo today we're at Freshwork. We're just reminiscing about your five and a half years stint in Germany as well. Yeah. Um, Arun also speaks German. Yeah, exactly. And I don't, I mean, my teacher literally said, yeah, for you to succeed, just do extremely short sentences, then it's limited how much you can screw it up, just to put it into perspective.
[00:01:12] Arun: You know, my children grade my German very poorly. You know, if they
[00:01:15] Mikkel: well,
[00:01:15] Arun: hear this, they'll be like falling off the chair. A
[00:01:18] Mikkel: I, I think that's just, you know. Uh, how it is to be a parent. They, they will kind of grade you poorly on a lot of things. So for me, it's not the German. It's not, stop, stop projecting Mikkel. Okay. Sorry, sorry, sorry. Uh, but back to you, Arun. So you work at Pleo. You have, previously been at Freshworks and AppNexus, uh, had a stint there.
[00:01:37] And, uh, today, uh, I believe you're managing a fairly big team over there. Tell us a little bit about the work you do at Pl eo
[00:01:43] Arun: Fantastic. Um, yeah, I think, uh, very quickly, my, even my background is I'm a very atypical CRO in the sense of I'm an engineer, first and foremost, two engineering degrees, and, uh, almost worked as an engineer for almost a half a decade or more and a product manager, and then did consulting stint as a second, uh, avatar of my career.
[00:02:04] Since then it's been mostly growth scaling, two companies. Now, Pleo is the third. In Pleo, my mandate cuts across most, exactly the soup to nuts of the customer journey from marketing to sales, presales, um, you can customer success and such. So roughly we have close to 450 or so people who are, uh, serving 30, 000 customers all in.
[00:02:27] So it's a fairly, uh, complex operation because we also cater to two segments, uh, both the SMB and mid market. And also seven core countries. So you can imagine the complexities
[00:02:39] that come with it. But that's what makes it fun.
[00:02:42] Mikkel: Yeah. And, uh, and I guess it basically means that, uh, you know, the leaders of each department, they roll into you or how is that set up?
[00:02:49] Arun: That's right. So we have an interesting structure. We, you know, most companies have a matrix type structure. We have something called a domain structure. So we call us, if there is a big problem statement or a problem area, we have a domain. And the domain has a leader. And they will have people from all kind of tribes or competencies.
[00:03:09] Let's say it, uh, so like for instance, our SMB domain, SMB team, uh, includes not just salespeople, but also engineers and product managers, because we are investing heavily in product led growth motions and such.
[00:03:24] Toni: that's pretty, that, you know, really interesting to dive deeper into maybe in a little bit, I think just to kind of give a frame for some folks, right. Because you know, lots of, lots of people listening are from, you know, your, Europe region basically, uh, quite a lot actually also from the U S right.
[00:03:39] And I think Pleo is not a big name yet in the U S not sure what the plans are, kind of the. Uh, Pleo is basically the, the, uh, the European version of Ramp, right? And you guys are growing just as crazily, I would say, and basically kind of behind this around a hundred million in ARR ish right now. We don't want to be too exact around that.
[00:03:58] and growing still at a breaknecking, you know, 80 percent plus kind of pace year over year, right? So this is, this is the kind of operation that Arun is, is running here just to give, uh, give everyone listening in a bit of a feel for. the depth, the complexity, and also kind of the value of those insights actually might be coming out of you today. so just to kind of, you know, provide that a little bit.
[00:04:18] Arun: Maybe a couple of things I would add Mikkel is, uh, I think we like to consider Ramp as the Plio of US, but, uh, I have to say they, they are executing extremely well and, uh, we take inspiration from them. And we even share investors. And also we are growing faster than that, uh, but that's for another day.
[00:04:36] But, uh, net net, uh, in a, we're in a good spot. Yeah,
[00:04:40] Mikkel: basically we wanted to bring you on because, so we've talked a couple of times about hypergrowth. It is just so interesting to have someone who is in it, who is in that company right now, especially in this, in this market we're operating in, right. Uh, and kind of unveil what are some of the tenets and challenges of working in that kind of environment.
[00:04:58] And maybe just to kick us off, I think quite often what you see out there are the great stories. All the things that went really well, but also you just have some of the things you said now, you have multiple segments, multiple markets growing at breakneck speed. I'm sure there must be a lot of growing pains that come with that.
[00:05:17] Uh, and, and you also work at other fast scaling companies. So I'm curious maybe where, whether there's, uh, some kind of challenge or something you've experienced to that end that you, uh, you can share with us and the listeners.
[00:05:29] Arun: Yeah, it's, uh, growing fun, actually. Uh, I always say, uh, if there are no pains, why are we here? You know, that's what we are here to, uh, steer. And, uh, we have a great leadership team, which, uh, uh, looks at it as, uh, uh, growth opportunities and fun. There's quite a lot and, uh, Mikkel, as you correctly pointed out, when you are growing at that breakneck speed, uh, you are actually constantly there stretching the system at its seams.
[00:05:54] every assumption you make, is expired in six months or one year. every, uh, decisions you made, it's almost like a child growing so fast, you know, the clothes don't fit no more, you're constantly changing, uh, the structures and so. So I think the biggest, learning, I would say is the people side of things.
[00:06:12] Because when you're growing at such high speed, it's not about change management, it's about constantly managing change. And to be able to doing that, you need to have the right people with the right growth mindsets who are constantly, uh, you know, uh, swinging with you as a speedboat would. Uh, if, if you're all tacking left and they all tack right, it's going to capsize.
[00:06:35] So that is the biggest, biggest, uh, I would say, uh, uh, challenge at a growth, uh, you know, hyper growth stage, especially when you are starting to involve people that's more than a tribe, you know, 50 people as a tribe, you can stand up and have in our hands, you can talk to it. Suddenly when you talk 500 people, The energy you need to have to put into the change management and the inputs you have to take and constantly do for you to continuously adapt to the conditions that's constantly changing.
[00:07:03] That's the biggest challenge I've seen.
[00:07:06] Toni: And you kind of teased it a little bit early on talking about those domains and domain leadership, right? So this is, um, and maybe this is some experience that actually you had kind of, you know, carried through from Freshworks, which almost kind of has a similar journey potentially in some of those areas.
[00:07:21] I would say, you know, starting out, that's not, that's not how most organizations organize around those domains, right? Um, this is something actually from more of a product management perspective that people do this whole kind of flock thing, right? Um, is this, did this come, you know, did I guess right?
[00:07:37] This come from your product and engineering past, or is this actually an outcome of a growing pain? You saw something, you were hitting the ceiling, something wasn't working out. And it's like, Hey guys, I think we need to, I think we need to rethink this whole thing and we need to implement this. Let's call it this domain expertise here.
[00:07:53] Arun: I think, uh, uh, I want to give credit where credit is due. Even though I come from the product background, I was more like a old school thinker. Uh, but this came from mostly some of the Nordic companies that scaled ahead of us. So, uh, good examples would be, uh, Klarna and Spotify. So we had a lot of folks from, uh, Klarna.
[00:08:11] And there, uh, it was more about how our teams configured towards, uh, problem spaces. A good example is, let's take customer success and, uh, or SMB. In customer success, a customer, uh, success team, you know, there's a traditional playbook what they should do. You know, look at the high value customers. Uh, look at, have a steady cadence, build trust, you know, do QBRs or whatever.
[00:08:33] There are a lot of different mechanisms on how they do. At the end of the day, they're evangelists for, uh, the product to solve the customer need. And they have some of the most closest connection, uh, with the customers on a day to day basis. Wouldn't it be great if they are actually tightly linked to the product teams, uh, whichever they are to solve something much quicker.
[00:08:55] So we are able to also go back to the customer saying that problem is fixed. So that's one example of how do we do tight collaboration. Another example is the SMB segment where, uh, the unit economics doesn't work, uh, you know, at scale for a people led model. So it's more like how do we automate things constantly.
[00:09:14] And that's one way to make your workforce more productive. But an even bigger leap would be how do we bring that messaging that you want to talk to the customer in the product itself. So it becomes super intuitive, you know, just like the classic saying is, you don't have to teach how to use an iPad to a kid, just give it to them, you'll see what they do.
[00:09:35] So, the product should be so intuitive, easy to use, and, uh, the learning is very, very iterative in the lower end of the market for us to be able to, as we top up the funnel, it should go friction free end to end. And, uh, so that's, there are certain areas that it lends itself to that domain structure.
[00:09:54] Certain areas doesn't as much, but, you know, we continuously iterate and learn with the new model. We've been trying.
[00:10:01] Toni: So what just strikes me listening to you, right, so you have, so CRO is a title that's, you know, being loosely attached to, to all kinds of different, roles almost kind of, I think the most traditional one is like you have a, a sales leader that's growing up and then, you know, basically kind of gets the C level.
[00:10:17] Um, and then they call themselves CRO. Then you have CROs that basically include sales and, and post sales. Um, and then you have go to market wide CROs that basically include also marketing, right? The way you talk about the world very much is, customer and product centric, actually, which is, which is pretty cool.
[00:10:34] And I don't, I don't hear this all the time, you know, of CROs thinking, uh, about the world like this. So it almost triggered this question, you know, in those domains, right? Um, the. The product folks in there, they are still technically part of the product organization, right? They're not part of, you know, the go to market team, so to speak, it's just, just for, for clarity sake.
[00:10:56] Arun: Yeah,
[00:10:57] so, so here, this is where the distinction is. In a lot of matrix organizations, that's the case. But in our case, what we do is, they are part of the tribe, say they are part of the product tribe or engineering tribe. We call it competency. But what they build, what they do, is decided by the domain leader who is part of the go to market organization. So, another example is, uh, uh, marketplaces and, uh, uh, you know, partnerships, same thing. They have a very hard goals to actually increase the partnerships, actually, end to end, and various customer touchpoints. But they cannot do that without having a product angle that is attached to it, be it an integration with the HRMS system or a travel system and such.
[00:11:48] The strength of the product is actually directly linked to the strength of the value that you can bring together by a combined product value proposition.
[00:11:58] Now, that could be part of the core product and some companies, they do it, but it's better if it is linked directly to the go to market organization because the urgency and link to the revenue is quite high.
[00:12:12] Toni: I totally agree with that. And I, and I, and I think actually, this is, this is a way of thinking that, uh, more folks at a certain scale, right? Let, let me just be clear, right? If you're a single product, single segment, single market, I don't think this makes a ton of sense, right? Kind of that complexity level.
[00:12:29] But once you get to a certain scale, um, where you then basically kind of land up in this siloed land, not just GTM versus product versus finance, but siloed even within. within go-to-market. Right.
[00:12:42] Arun: Absolutely. In fact, Toni, you could say when a company is small, the whole company is a domain more or
[00:12:49] less, right? They all work with one goal. But when it gets bigger, and I'm also saying it doesn't work in all situations. So, when we have a very sales led motion, where it's very much like a, uh, you know, sales functional organization, uh, they have the best practices and everything.
[00:13:06] And in that case, the team that's building the product that is selling, they're two separate teams. Only in areas where the synergy is very high. We combined them, put under a single leader, and to make it work.
[00:13:19] Toni: I have one more, one more thing here because I was, um, you know, on a smaller scale, you know, Planday is kind of one of the, the Nordic, you know, HR players almost. But we had one other challenge and I just wanted to kind of ask you about this because you are with FinTech, you had a highly regulated space as well, right?
[00:13:35] All of the different markets have kind of different requirements. You have different competitors, you have different, you know, partnerships and so forth. How was the conversation, you know, when you moved into this domain expertise around should we do the domain expertise around the segments or should we do the domain expertise around the markets?
[00:13:52] you know, did you have that conversation? And I mean, we know how you, how you went in the end, but what were the reasons why you switched one way rather than the other?
[00:14:00] Arun: yeah, we did definitely have the debate. You know, you could basically create a domain by country, for instance. That's probably what you mean. And it's about the similarities. Where is the 80 20? So we went with, let's say, the SMB segment across Europe. Was the purchase behavior, how they do, was very similar.
[00:14:20] But their last mile requirements are different, but we basically combine them, so it's Pan European. Now, let's assume we go to the U. S. and, uh, there, maybe, maybe our product is not as extensible in the U. S. Maybe we have to have a U. S. as a separate mini domain or a separate company. And that's what I hear in some companies, you know, European companies that go to U.S. often fail. Uh, they, they fail to capitalize it. They look at the market size, they want to go, but they, they do it as a mode of product extension rather than it's almost should be another company. And Klarna is the one which has succeeded. And that's the approach they have followed, which is, uh, it's almost everything is replicated for such a large continental market.
[00:15:03] And in, uh, in those scenarios, that cut might make sense. For now, we are in, uh, within Europe in seven countries, uh, the cut around the segment made a lot more sense.
[00:15:14] Mikkel: So, um, one of the things that goes through my mind right now is, You must, and the team must face a lot of context switching all the time when you talk together because you have all these, different segments and markets. How do you bring clarity into the conversation and keep your eye on the ball as a team and as a CRO?
[00:15:34] Arun: Yeah, um, so this is a very interesting point because it's about, we have to go back to the first principles in this case to find, uh, what are the common threads? Like, say, uh, there are forums we have where we discuss the common threads. And, uh, it's so hard. Sometimes, uh, a particular regional nuance always seeps in.
[00:15:56] I have to swat it away or train the workforce to say, that's not for this conversation. But we need to create a separate event, uh, or, uh, uh, uh, a forum for that. So, you know, we try to have at a country level strategy, even though we have a company level strategy. Because of our product is highly regulated and distinctly different.
[00:16:15] Uh, by countries, let's say if I take a product like Asana, it will be 95 percent the same, Asana in the U. S. and maybe 5 percent localized. In our case, it's almost 70 30 because, uh, we integrate with the different local types of banks for money transfers and things like that. Uh, uh, especially when post Brexit UK and such.
[00:16:35] Or we also have, you know, last mile things like per diem, mileage, how does it, uh, accounting systems. Very, very different. So we try to carve it out. So we try to focus on the core, uh, threads that anything that's at the core thread that actually helps every single customer are discussed at the global forums and, but we create separate forums for country level things.
[00:16:57] So we are not always, you know, uh, optimizing for a global maximum. Because if you do it that way, the biggest market gets always the, uh, the pie, which will be UK for most European countries, or Germany for that matter. So the smaller countries will get swatted away, their prioritization and everything. So we create separate forums for that.
[00:17:18] And based on the business case, we invest according to each country, and also the maturity of each, uh, country in their own maturation journey.
[00:17:26] Mikkel: Okay. I think that that's an interesting way to look at, because my next question was going to be, how do you manage and plan the growth? And I think part of it, you gave a little part of the answer here. You build a business case by market to determine because the product is such a big factor to determine what you're going to do.
[00:17:43] But still, you also have different tactics, whether it's SMB and mid market, I don't know if you do accountants as well, as well, if that's a different game entirely, right? So how do you manage, when you're growing at this breakneck speed, and you know, I saw, was it what, two years ago you opened with a bang in several markets almost the same day it felt like, right?
[00:18:02] So, so how do you go about planning those kind of next steps you're going to take as a business to keep on being at the growth rate you're on?
[00:18:10] Arun: Yeah. I think, go back to first principles. So let's talk about planning. Uh, in planning, you know, you essentially have three major variables you are playing with. Right? One side is the revenue envelope, how fast you want to grow. Cost envelope, how much you can invest. And then the people envelope, what are, that includes things like what capabilities and everything you have.
[00:18:35] On the other side of the spectrum, you already have something going. And if you look at it, uh, let's take two cuts. One dimension is the segment. Which segments are you in the early alpha, beta, or a, you know, full throttle phase? And which country you are in the alpha, beta, or full throttle phase? So now you have a complex matrix of saying, let's take a, there is in this country, let's say in Denmark, in this segment, we have a solid product market fit and we want to go full throttle.
[00:19:08] And you look at the unit economics, uh, whether it's CAC to LTV or any other ratio and say, how much more TAM is there? How much more we can go? And how much more, uh, that then goes back to the number of people you want to hire and the cost envelope which you can operate. And you have to take the same approach kind of cell by cell.
[00:19:27] You know, if I put a three dimensional matrix, each cell has a different answer. So, your ability to, uh, uh, you know, plan at that level gives you a lot more, uh, predictability when it comes to... Otherwise, what will happen is... You might still hit your target, but you don't know which engine fired, which engine failed to fire.
[00:19:49] But you're able to do at that level, by country by country, by segment by segment, and based on their maturity, whether it's a pilot, or it's the beta, or is it like full throttle, you are able to create, uh, and, and this maturation also happens over time. And, uh, most companies at this stage, whatever I'm saying might be all Greek and Latin, because they wouldn't have the data plumbing.
[00:20:12] They wouldn't have the models to actually measure all this. We didn't have three years ago. Now we put in place everything so we can go to each cell and figure out exactly what's happening.
[00:20:22] Toni: so you, you talked about, you know, predictability planning and so forth. Right. I think for, for me personally. Those two things are connected through execution, right? Kind of really at the end of the day, the plan needs to be executed, you need to course correct, and that's how you become predictable.
[00:20:37] It's not that you end up hitting the plan exactly like you laid out, you might hit the revenue number, but how you in the end got there, that's you maneuvering, right? Um, and you know, there was very recently, we kind of cited this in some of our content pieces, there was very recently on an open view. Uh, you know, one of the VCs out of the U S kind of early stage.
[00:20:56] I'm sure if you're familiar with them, they did a benchmark and they
[00:20:59] asked a couple of founders, asked a couple of founders, Hey, Hey folks, what's, what's top, top three priorities for you? What are you most worried about going forward? Right? So this is very topical, very recent. And the number one, by far, we're talking like 75 percent of founders said that worth is 50%, the other thing.
[00:21:17] Uh, they said go to market execution is our, you know, this is what we're worried about every single day. Right. And I think it's, you know, it's connected to some of the, uh, you know, growth at all costs and the change and the capital markets and all of these, all of these things, but really kind of what then happened for us was like, okay, cool.
[00:21:34] Go to market execution seems to be a big issue for folks. But, you know, what is, from your perspective, what does that actually mean? What is GTM execution, right? And then number two, what does it mean for you being good at it? You know, what, how, how do you, or how do you become good at it if, if you're currently worried around this? would, would love to hear your thoughts on this.
[00:21:56] Arun: I think, uh, again, if you go to first principles, this problem was uh, more acute now, three years ago or even two years ago, uh, uh, there was, money was going plenty. It's like, uh, there was only metric everybody was looking at, which was a growth rate. Now, suddenly there want to look at five metrics, not just growth rate, how efficiently grow.
[00:22:17] And this is when, you know, the Warren Buffett saying, when the tide goes down, you see who is naked. And this is what now suddenly everybody is fully exposed. Like, okay, what exactly are we going to do? And, and here you, you mentioned about a few things, which is no matter how good a plan you create, first of all, there are planning mistakes.
[00:22:37] Many companies don't plan it at the level of the, you know, I call it as a, are you able to understand your core KPIs? And wiring it to the ground, meaning, is that actually a responsibility of somebody? Who is actually compensated on that? And what are the five core KPIs? If it is not all the way goes to a frontline rep, or a CS, or other person, then the boat is not going, you know, your controls are not connected to the rudder, number one.
[00:23:08] So let's assume even if you do all that stuff correctly, no matter how much you do, the market changes quite fast. And what, how many, if you make ten assumptions, Four of them are going to be incorrect over the time. So how are you able to course correct over the time? So we try to do as like a, you, you try to do an annual planning, that annual planning.
[00:23:31] I've been here at now Pleo, uh, two and a half years. We are now the third annual planning. Each time, I look at back and say, wow, how far we have improved. So, the learning goes back into that and we continuously improve. Now, once that is launched, we also do the quarterly course correction. In some cases, we are trying to go to even weekly course correction.
[00:23:52] A good example I can give is, let's say you are spending money on digital marketing, which is a big line item for every single, uh, SaaS or software scalers these days. Now, how many of them measure end to end from the marketing budget all the way to actually money in the bank on our side, right? So that means from all the way to leads created, to opportunities created, to conversion, to the size of the deal and how many of them get onboarded and how many of them don't churn.
[00:24:23] If you look at end to end and not many look at it that way. But if it is off, what do you do? Do you throttle the spend, go fix the areas where it is, and then pick up spend? So do you have the agility to do that? If not, you are going to be wasting money somewhere, shape or form. So there are, I'll just give one example.
[00:24:43] There are a lot of pathways by which money is being spent. Another example could be the other big cost is people cost. Let's say you're launching a new segment or a new market. Should you hire two people, two sales reps? Uh, 10. Uh, and, uh, uh, and if you're, anytime you go slightly ahead of your skis by some optimistic assumptions.
[00:25:05] You run into a problem where they are not productive, it leads to other issues, and so on. So, how do you carefully calibrate and go, and that's the art and the science.
[00:25:15] Toni: Yeah, I love that. so you mentioned a couple of things around, uh, you know, weekly, monthly, quarterly cadence here, which is, which is pretty interesting. are there, are there any other pieces we talked about, you know, being able to, uh, have a strong plan, um, ideally all the way to the bottom or bottom up, or however you want to kind of, you know, explain that, right.
[00:25:35] and then having the awareness and the consciousness of. Well, whatever the plan is, we still need to, we still need to have maneuverability while we execute, right? are there any other tenants for you kind of that, that kind of bring that, that execution rhythm to you? And it might, might be, or might not be, by the way.
[00:25:53] Um, it kind of, you know, I'm just asking if there's another kind of box in your brain that, that, uh, we haven't opened yet on this topic.
[00:25:59] Arun: I'll give you about the people. So, for instance, I talked about the rep, hiring reps and such. we run something called a Capacity Planning Call because, uh, two years ago, you know, we had a, our plan, operating plan, but, throughout the second half of the year, we were always, 10 reps behind. So if you're always 10 reps behind, uh, you're never going to hit the target.
[00:26:23] As capacity, you are off. So, we took the learning, uh, and we tightened it to so much. Now we actually have built a predictive model on people. We basically say how many of them are going to get promoted. We can predict how many of them are going to be in the performance plan, are going to leave, or how many of them decided to leave, gave notice.
[00:26:44] How many of them are going on maternity, paternity. You put all these variables and you can predict what is the capacity up to three months ahead. And that means you don't have to wait until a person leaves or something happens because there is a latency to hire because if I send, all right, go ahead and hire for that, uh, we call it as a from, you know, uh, publishing, uh, a job description to a but on, a seat.
[00:27:11] How long does it take, depending on a market and the, uh, you know, at what pay level you're paying. It's going to be anywhere from three to six months. So how can we do the same forecasting on the capacity? And also bake in the margin. Uh, make sure that you are always not tightly running. If you have to hit, uh, 50 million you have to add, your capacity should be at least 55 to 60 million because you'll have this volatility in between.
[00:27:37] And how quickly can you trigger and proactively hire an onboard? So that's another example where you can bring the planning diligence. into the process.
[00:27:48] Toni: One last thing on this, actually, before, you know, Mikkel just gave me the sign and I'm ignoring it. Um,
[00:27:53] Arun: kicked you under the desk, I saw that.
[00:27:54] Toni: Yeah, exactly. Um, uh, one last, last question on this here. So, all of this, you know, I can assume which tool you're using. It's probably going to start with, you know, uh, it's probably kind of some spreadsheet, um, to kind of figure some of these pieces out.
[00:28:07] Right. But who's, I mean, who's your, who's your, let's just say the business partner. Is this something that sits in finance? Is this something that sits in. Uh, revenue operations. This is something that sits like completely differently, you know, where, where, where do you have that person or that team helping you with all of those insights?
[00:28:24] Arun: Yeah, at the moment it's a collaboration. It primarily sits in RevOps in terms of the planning, the tracking, and also generating the insights at a monthly level to say, so we make look at the insights and make decisions, course corrections at a monthly level. But then it's a collaboration between the people team and the finance team as well,
[00:28:48] because they are part of the conversation because they are going to cost it out and they're going to also action, uh, if there is any kind of hiring, any changes and things like that.
[00:28:57] So it's a very tight collaboration to ensure. But the bulk of the, up to the inside generation sits with the revamps, planning and inside generation.
[00:29:06] Mikkel: So I kind of want to just to circle back to something you talked about that I found super interesting is basically you're forecasting your future need in terms of capacity. And I think most of our listeners, they will have some kind of capacity plan in place. And I think what I've seen is very few, they then go to the level.
[00:29:25] I mean, first off, few go to the level of detail with attrition and stuff like that, but even there's another step, which is the supply side. So basically you can call it demand plan and how you're managing that side. So have you done any kind of similar exercise on that end? Because at the end of the day, you also want to feed the reps, right?
[00:29:43] It doesn't sound like you've had the problem, but I'm just curious to see whether it's because you have something in place that's actually working really well.
[00:29:51] Arun: So, there's always this tension, right? Like, you know, even the capacity plan, people capacity plan, it doesn't have to be as complex as what I was saying... you're growing, let's say sub 30%, if you're growing about 30 percent up to 70, 90, 80%, your biggest blocker is people. Now, let's say you solve that. The second problem is, uh, is the demand generation, right?
[00:30:16] Like because you cannot hire people faster than you can create a demand. And, uh, so here, uh, I've never worked in a company where people said, Stop the pipeline, you know, too many, too many leads that it's always, it's, it's always about, you know, there's never enough leads to go around and never enough opportunities.
[00:30:38] So there it's a, it's a combination of multiple, facets and I wouldn't say we mastered it. So it's about, let's say the same approach for demand generation, let's say there are 10 ways all the way from digital marketing to field marketing events to SDR engine to partnership based. Now, you can have the same story, the maturation of each one in every organization is different.
[00:31:02] Some of them is mature, some of them is starting up. So you need to have the same approach for each one to say what maturation curve you are in, how much you want to invest and how much you want to double down. So there, I would say our forecasting needs to get even better because it's always, there's a lot of external factors involved.
[00:31:23] And in addition, there is. Another sub layer, which is about, and this I've seen in every single company I worked for, the whatever demand you have are you get taking the most out of it. So for instance, if a company was generating a hundred to 200 leads, I'll give an example. This was in FreshWorks, early, in the day, you know, uh, every, uh, rep was getting close to 250 leads.
[00:31:46] And, uh, they had a target of 1K MRR. And, uh, after 4 5 years, they had all something like 60 leads and their target was 3K MRR. so they were able to squeeze more out of the existing leads by higher quality leads, uh, better product for market fit, better trained ones. So you're able to, you know, convert them better, faster, and to bigger opportunities.
[00:32:08] So it goes hand in hand, uh, along with that.
[00:32:11] Toni: So a question on this actually. So this is, so we had Pablo Dominguez from, from Inside Partners here and he, and they've wrote a
[00:32:19] Arun: I know him very well, Yeah, I know him well,
[00:32:21] Toni: Yeah, so, um, and so he wrote a book with, uh, I forgot the other guy, um, uh, but, um, you know, one of the metaphors in the book was basically this Formula One pit stop thing.
[00:32:32] I'm not sure if you're kind of, you know, recollect this, but basically kind of, it went from, I don't know, uh, basically a minute, you know, took a minute to refuel, put the tires on. Uh, 50 years ago, whenever they started, and it's now down to what is it? Two and a half seconds or something like this, right? So this is the, the, the awesomeness about this example is, you know, they didn't jump then like, okay, for one minute to 30 seconds.
[00:32:54] And then from 30 seconds to three seconds, they kind of, uh, you know, basically kind of shaved away second by second over this. the half century, basically, that kind of got down to this, right? what you just mentioned, like, you know, from 250 leads to 1k, and then at 60 leads to 3k, it's kind of the same magnitude, almost.
[00:33:12] I haven't done the math, but it sounds like the same magnitude. So, I feel many, many, many people forget about that stuff. They, they see like, hey, these improvements, you know, maybe we'll achieve them, maybe not. How do you actually handle this? I mean, is this something where you put stretch goals in front of people or where you kind of do something else in order to achieve this, or how do you navigate around this?
[00:33:33] Arun: yeah. First of all, Pablo and I worked together at AppNexus. We still keep in touch. He's a good friend.
[00:33:39] Um, you are, you are right. And I love that example as well. Um, now, to do this example, let's take, if you have somebody told to someone else, you know, let's go from one minute to three seconds. They would have lapped you out of the place.
[00:33:57] So, it's, it's, uh, it's about, it's more the believing in the art of the possible. And, oftentimes, where it fails is, uh, most scale up companies tend to have first line managers who are actually first time managers as well, right? And, and, and, uh, the mindset often then is like, you know, they, they, they are afraid of, uh, you know, uh, okay, let's go from one minute to 30 seconds.
[00:34:22] They'll freak out because that, what does it mean? How do we manage? So, it's about creating the vision and actually using the insights to say, uh, here are the areas, set micro goals, let's go from, let's say, a conversion rate. Uh, if it is 20%, next quarter, let's go to 23 percent to 25%. And it's constantly, and similarly, other metrics like deal velocity.
[00:34:48] If it is 60 days, can we close in 55 days, on average, to 50 days. And deal size. So, it's a combo of three or four multiple, uh, many variables. And each one should have a micro goals at a quarterly level and educating and sharing and making people believe that it is possible. That's the biggest thing. If you're able to make it believe, and that's why I said the micro goals work a lot well, because you can say, all right, this, this first quarter, this quarter will improve it this much.
[00:35:22] Second quarter will lead this much. And suddenly you look back two, three years later, wow, it went to from this point to this point and it looks very impossible.
[00:35:32] Toni: And, and as a, it's almost a follow up question on this is, um. And maybe this was because I was a first time manager at that point, but, uh, uh, usually my CFO came to me and was like, Hey, Toni, we need to get this conversion rate from 15 to 20%. Right. We just need to do this because money and CAC Payback and efficiencies.
[00:35:49] And I like all of those improvements, because they, you know, fall fully through to the bottom line. So Toni, you need to figure out how to do this. I mean, my gut reaction always was like, no, we can't do this and so forth. And you're right about the belief system. I think that's very powerful, but at the same time, right?
[00:36:06] I mean, you are the CRO and you work with the front lines, you understand what is possible, what is not possible, and then finance sometimes doesn't, right? And, uh, how do you navigate, how do you navigate the. Uh, the side of the planning and the financial planning and, and, and, you know, they are also just trying to kind of hit the ambitions that the company is setting out.
[00:36:27] Right. So it's not like the coming, the CFO is not coming up with those goals. How do you navigate that? How do you kind of have a, have a good conversation that doesn't end up, well, you know, let's agree to disagree and let's just lock in what we don't believe in. Right. How do you navigate that?
[00:36:41] Arun: yeah. Let's come to the CFO dynamic, second. The first one I would say is any material productivity improvement needs to be linked to, uh, solidly defined initiatives. in the planning
[00:36:55] stage itself. So, just like when you, when you go back to when you, when I talked about this three dimensional cube of different cells and you're able to link key metrics to targets and things like that.
[00:37:08] Anywhere you assume the productivity, let's say pipeline generation capacity is going to increase this year, by end of this year, 20 30%. How are you going to do that? And this is what we capture via OKRs. We don't capture the targets via OKRs. That's business as usual. But anytime you have to do a step change by being, uh, improving something, or innovating something, or building something that didn't exist, uh, that's what's captured as part of the OKR process.
[00:37:35] And the OKR process will have a clear milestone at a quarterly level. So, uh, an example is the conversion rate you talked about. Conversion rate, if it has to be improved, leak quality should improve. And enablement of the sales rep should improve the collateral and everything they're using, the pitch, how do they do it has to improve.
[00:37:55] Product market fit has to improve. So is that lined up? Each one is that initiatives lined up against that. So that's the core thing that gives you some confidence. Is that assumption hope or do you have a strategy behind it and a plan of action
[00:38:08] behind it? With clear commitment from various parts of the organization, right?
[00:38:12] Otherwise, so that joint dialogue is what, uh, you know, when you go to a CFO or you have a CFO CRO dialogue, of course, you know, uh, there, there needs to be an inherent tension in the organization to basically say, how can we grow faster with less, right? That's, that, uh, classic dilemma. And, but, but if you make it very factual and go clear assumption by assumption and link it back to different things, And ask whether that's a resource.
[00:38:40] The conversation becomes more factual. So an example is, if I say, I need to have an enablement team to drive enablement to improve it by 10%. My question, next question is, is there somebody doing enablement? Do they have the right tools? Is there a budget for external uh, you know, trainers and so on? And is that funded?
[00:38:59] And are you going to fund it? And is there a business case for that and such? So you need to make sure it's all very factual. Then it becomes a collaborative conversation. Uh, rather than, you know, um, based on hope and emotions and such.
[00:39:13] Mikkel: Okay. So I think the other piece, and maybe this is kind of a, maybe it's almost the same question packed slightly differently, right? There's always this balance you need to strike between the ambitious goal versus what can you also do. And in this scenario, I'm thinking especially also. So we talked about, either the lateral conversation with the CFO or even with the CEO and board, but you also have a team underneath you that you also need to kind of interface with on the same, the same coin kind of, how do you go about that, that piece?
[00:39:46] So you mentioned getting people to commit and so on.
[00:39:49] Arun: And this comes to, you know, incentives and alignment and also mindsets, right? So you're absolutely right. Yeah. CRO's role is now interfacing with a 360 view of people and also involving in the product too, because, uh, you can't make a revenue target or a prediction without seeing what's coming. What's the, what's the forecast in terms of.
[00:40:13] Is there any new monetizable product that's coming down the pipe and can I attach a value towards it? So it's a, it's a joint conversation. And the most, one of the most tricky one is also with your team. And, uh, and, and I think if you have a team with a growth mindset and a core belief that this could be improved another 20%.
[00:40:36] And such, uh, number one, if the no belief is there, and, uh, then you, the, the game is lost already. Like, uh, uh, then there will be only stiff resistance to say, it's perfect, it can't go below. And, uh, for an example, it's a good example. Back in the day, one, one minute would have been like, awesome. Everybody said it's impossible.
[00:40:57] How do we bring it to? So you need to have the talent density that actually also has a constructive. Uh, mindset that more is possible, number one. Uh, number two is, uh, how are the incentives and structures aligned? Uh, is that a safe space to fail? You know, when, when people take these big bets... Will they be penalized or will they be rewarded even if they fail?
[00:41:20] So that's a very important kind of a psychological safety that you provide to say, you know what, I'll take a stretch target. but this is, I know my gut says based on all the planning, this is what I could hit, but I'll take a stretch target, but you know, don't penalize. So you need to break in the safety margins, how you take all the bets.
[00:41:38] You need to know which ones are sure shot, which ones are, uh, stretch goals and bets. And somehow bring that in into the conversation for your board and CFO as well. So that way we can set the right expectations that it's not a panic situation if a bet doesn't materialize.
[00:41:58] Mikkel: we, we have time for a last question and I wanted to, uh, do something that you actually failed to do because you asked for questions on LinkedIn and we actually got a question that I want to float by you. Uh, Arun, because you're in fintech, which is a very fast paced environment. A lot has been happening there, uh, over the last couple of years.
[00:42:18] Uh, you also, we talked a bit about regulation and so on, right? So how do you actually manage external factors and external change? Um, do you have any examples of something you've experienced here?
[00:42:29] Arun: yeah. I think this is something new for me. to be honest, I've never worked in a highly regulated environment. So I'm learning myself. And, so the, some of the areas where I've learned is. Things take longer, and I've made some mistakes. So, when I say things take longer, if you want to launch in a new country, and then you have to get some regulatory approvals in some cases.
[00:42:56] In some cases, you need to do some compliance checks where external policy enforcement bodies are involved. Or you also have to rely on some partners to accelerate your go to market. And, uh, oftentimes, uh, depending on how big you are, your partners prioritize their own revenue. And if you go to a very new market, like the US, you are a small person there and it takes longer.
[00:43:20] So it's a, it's a, it's a learning process and, and I think we did have some hiccups along the way, but it's a learning, I would say, uh, we learned, we learned our lessons and, uh, next year will be even better.
[00:43:33] Mikkel: Wonderful.
[00:43:35] Toni: Arun, this was fantastic. Uh, I learned a bunch. I'm very sure that a lot of people that are listening, learning a bunch also, I think obviously the applicability is sometimes difficult, right? Because you guys are on a very specific, very unique, very awesome journey. Um, And then a lot of other people are like in a spectrum, usually below that.
[00:43:56] Um, but still kind of having that understanding, carrying that way of thinking into your execution, I think it's extremely powerful and, uh, Arun. Thank you so much for spending time here. And, um, and thank you so much for enlightening us.
[00:44:10] Arun: And Toni and Mikkel, thank you for the opportunity. I also want to say that to the listeners, you know, just because we are slightly ahead, don't worry, I think it's part and parcel of your, uh, learning process. Uh, whether you are, uh, you know, 5 million company or 20 million company, and there's a lot of learnings along the way and, uh, you know, feel free to reach out as well, if you have any questions or any guidance, happy to share, pay it forward.
[00:44:35] Toni: Wonderful, Arun. Thank you so much. And thank you everyone for listening. Thank you, Mikkel. And, uh, yeah, have a good day. Bye.
[00:44:44] Arun: Thank you.