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Lots of succesfull companies were built on OK customers, an OK team and with an OK infrastructure. Today, that's not enough.
We cover the latest benchmarks from OpenView, and discuss what it means.
We cover the latest benchmarks from OpenView, and discuss what it means.
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: ​hey everyone, this is Toni Holbein. You are listening to the Revenue Formula. In today's episode, we're going to talk about why having okay customers, okay people, and okay infrastructure is simply not good enough anymore. Enjoy
[00:00:13] What's boyo?
[00:00:19] Mikkel: I just love it when, uh, when we build, we do so much work for this show.
[00:00:24] Toni: We do so
[00:00:25] Mikkel: so much. We do so much work. So much thought goes into each and every episode. And then when you have like. Two episodes compared. We go like, you know what? I don't like this. Let's do this other thing instead.
[00:00:37] That's usually a great recipe Usually a great recipe
[00:00:40] Toni: you put in so much work and I just come and say like, that's shit. That sucks. No one wants to talk about that.
[00:00:46] Mikkel: exactly and also by the way I have an intro today that's not predicated on kids Which is crazy. Yeah. So, uh, as I mentioned, uh, I was at a meetup and I met a wonderful other person, VP Marketing
[00:01:01] listener of the show. I was like, great. Obviously, you've given us a review and you could just see the whole expression on the face shift.
[00:01:08] And it's like, um, it's because I used to work for this company that did a lot of reviews. I'm not going to mention the company. So we weren't allowed to do any reviews. And that habit just stuck with me. I'm like, break that habit now. Break it. Break it.
[00:01:23] Toni: she was just trying to be nice. She never listened to the show
[00:01:25] Mikkel: No, exactly. I was like, I listened to it.
[00:01:27] They were terrible. You don't want my review. You don't want it. But by the way, if you're listening now and you actually do enjoy it. We do enjoy reviews, so it helps us reach more listeners,
[00:01:37] Toni: the
[00:01:37] Mikkel: helps support the show, we get more vanity metrics, it's good for me, I get to keep my job, you know, that kind of stuff.
[00:01:43] Toni: It's basically, it's basically if you're no fun, Mikkel. Yeah,
[00:01:46] Mikkel: It's basically
[00:01:48] Toni: exactly. So,
[00:01:49] Mikkel: if you don't fund Mikkel. Yeah, exactly. So, uh, what happened, uh, in the last couple of days is OpenView dropped their annual benchmarks.
[00:01:57] Toni: That's it.
[00:01:57] Mikkel: They dropped their annual benchmarks. Uh,
[00:01:59] Toni: We had Carl here on the show,
[00:02:00] Mikkel: we had Kyle, Kyle on the show and he said, we're going to drop it soon. And then he got real quiet because he was going to obviously push it over the finish line.
[00:02:08] And he did, thankfully. And, um, you have to remember, this is top quartile. It's, uh, the OpenView portfolio. So a lot of PLG, they also kind of stack out how, The respondents are, you know, they're from a graphics basically. And one of the things that kind of stood out to me and wasn't talked about a lot was.
[00:02:28] Go To Market Execution. This is the number one challenge CROs, CEOs, C whatever Os have at companies. And then not much more was mentioned around that. What it is, what's my immediate kind of action, what, what,
[00:02:41] Toni: there was literally kind of, there's a slide with this chart on it. Um, and it's one of those like, horizontal bar
[00:02:47] Mikkel: Yeah. That
[00:02:48] Toni: that is sorted for the longest on top and then it goes slim really
[00:02:51] quickly. And the biggest piece that everyone is concerned about is Go To Market Execution. You know what you can't find anywhere in the whole deck? Anything about Go To Market
[00:03:01] Mikkel: Execution.
[00:03:01] oh,
[00:03:02] Toni: It's like, oh, PLG, pricing, all of that stuff. It's all over the place. But that part? No,
[00:03:07] Mikkel: And if you try to Google what it is, it's like, this is how to make a Go To Market strategy or plan. You don't find, like, this is what it is. So it's like, do people, what, what do they think it is?
[00:03:16] Toni: No, I went, I went into the CRO function in, Pavilion Executive. I took the screenshot of, hey, the, the biggest concern is go to market execution, you know. And then I asked all of the CROs there and there. I mean, it's pretty dormant to a degree, but it's like 1, 500 CROs in there.
[00:03:32] It's like, what are you guys doing, or ladies, in order to be excellent in your go to market execution? And it was basically crickets.
[00:03:41] Mikkel: They're busy executing. They're busy
[00:03:43] Toni: either that, either that, or everyone was like, you know, leave me alone,
[00:03:47] Mikkel: Yeah.
[00:03:48] Toni: Um, but it was, uh, there was not much actually coming out of this and I was like, Oh, cool.
[00:03:52] You know, new source of information. I could maybe bring this into the show. Well, you know, that's how it is.
[00:03:56] Mikkel: So no proprietary knowledge today.
[00:03:59] Toni: Thanks, Sam.
[00:04:01] Mikkel: 99 bucks out there. Oh, it's not, anyway. So, you know, the way I interpreted it was really. Your ability to reach target.
[00:04:08] I don't know how you see actually go to market execution. I think it's pretty important for us to just level set before we get into the meat here today. What are we, what is go to market execution?
[00:04:16] Toni: Yeah,
[00:04:17] I think, I think hitting a target is kind of part of this, but it's also all the intricacies, all the, you know, turning of wheels and cogs kind of in that machine actually happening like you want it to be right for that, for me, that's good execution.
[00:04:30] If you think about a project that's being executed, well, you want that, you know, it's fast, it's high quality, it's on time, it's on budget and so forth. Well, that would, you would say like, well, that was a really well executed project, right? and I think the same translates for your go to market, it's a well executed go to market.
[00:04:49] If everything is going, you know, I don't want to say as planned, um, but it's going pretty smooth and really nice direction on time, on budget, on target and so forth. I think that would encapsulate, GTM
[00:05:00] Mikkel: Yeah.
[00:05:01] Okay, so this is one of the big concerns, and there's a lot of challenges also kind of being shared in that report, that benchmark report, right?
[00:05:10] Again, this is top quartile, which for me on some level makes it even more scary that things like CAC Payback, so the time to recoup your acquisition cost, is going up. It's increasing. It's taking longer to get back that money,
[00:05:24] Toni: Did everyone hear this? It goes up.
[00:05:26] Yeah.
[00:05:27] Mikkel: It extends!
[00:05:29] Toni: It gets worse. Yeah. So, you know, this is, this is one of those things, right? And, um, I think it was also clear in the, that one, uh, one metric was ARR up per FTE. I think that was the only metric that improved.
[00:05:43] Mikkel: But that's also easy to hack.
[00:05:44] Toni: And, and no, I mean, what does it mean? Right. It means that obviously, you know, lots of layoffs happening. Um, and then you think, well, where are those layoffs happening? Well, they're definitely happening in the go to market teams. And then, you know, why are they happening in the first place? Well, you know, you want to increase your CAC Payback, right?
[00:06:02] Mikkel: Mm.
[00:06:03] Toni: But, well, it did go up. It didn't go down. Right? So then, what that then means, couple of things actually. One is, you might have cut the wrong thing.
[00:06:13] Mikkel: Yeah.
[00:06:16] Toni: And again, there maybe grow buy Growblocks time, uh, or number two, you cut the right things, but the market effects of, uh, you know, worse conversion rate, worse ACV, worse, whatever. simply were so large that they consumed all the, the, the CAC reduction that you basically
[00:06:36] Mikkel: you basically had.
[00:06:37] Yeah.
[00:06:37] Toni: and in, as a result, you know, CAC, CAC Payback is going up and when we say top percentile or quant, you know,
[00:06:44] Mikkel: Quartile. Quartile. Yeah.
[00:06:45] Toni: it was like, Hey, you know, this, this basically a selection bias happening
[00:06:50] Mikkel: Yeah.
[00:06:50] Toni: Like, you know, who is, who is getting investment from OpenView is like pretty, you know, good, reputable, you know, company, obviously only, you know, really, really good companies are getting that. Um, and we're only looking at that slice. We're only looking at this top slice of the market, if you will. and then, you know, that broken down and obviously, you know, outliers.
[00:07:10] So outliers of the outliers. And then just the normal outliers, you know, when you look at that, uh, CAC Payback is still going in the wrong direction.
[00:07:19] Mikkel: Yeah, crazy. Um, and I think the other piece is then, uh, NDR.
[00:07:25] Also worse.
[00:07:26] Toni: So net dollar retention is a new word for net revenue retention. NDR is down across the board.
[00:07:33] Mikkel: And it's, uh, they had this, it was a great caption, I kind of laughed a little bit, even though I should probably cry.
[00:07:38] It's no longer Land and Expand. is land and maintain. It's like, oh, so sad. So sad. So, um, I think the, the funny thing is, I read this morning on the train to work, software spending is still increasing. It's, it's gonna cross was a, I think they said a billion dollars. And I was like, that seems low, but it's, it's still increasing quite a bit year over year. But in our industry of B2B SaaS,
[00:08:06] Toni: I think it's, I think it's more than just that, right? It's, um, uh, you know, all of those companies, they're not only selling to B2B SaaS. There's, there's some, some other stuff is going on here as well, right? and I think this is, this is what's kind of going across this. Um, I think, uh, Jaco and Sam and all of these guys are calling it the golden age of, of SaaS is over. You know, I'm not sure if I would call it that. I would just say the easy, the easy age of SaaS is over. Now we're, now we're all sadly becoming real companies. And I know a lot of you people try to flee from, you know, the Accenture's, McKinsey's and, you know, Goldman Sachs's and Mercedes Benz's and Maersk's and I don't know, whatever company on the planet, um, to go into this, um, you know, espresso on demand, uh, work environment.
[00:08:56] I think that is, that is probably kind of changing just a little bit. I think we're being corrected into, Hey, you're, you're not just You know, sure, you're exciting and stuff because of, well, uh, instead of trying to recoup all the costs with the initial sale, you can do it over time. So you can make the initial sale really small, which makes it easier to sell in the beginning.
[00:09:15] And instead of only selling to enterprise, you can also sell to SMBs. There's so many wonderful reasons. and now all of this is just being like, yep. We know about this now, it's priced in now. You're just, you know, chemicals was pretty new a hundred years ago as well, you know, and that's basically what's happening now.
[00:09:34] Mikkel: Yeah. So there's a lot of new textbooks we need to learn about finance, I guess. And, uh, how to operate a business for profitability and,
[00:09:43] Toni: Yeah, and, and the funny thing is, um, you can just go to your local library, um, it's a...
[00:09:48] Mikkel: they still
[00:09:49] Toni: are like, you need to dust them off maybe a little bit, um, but maybe this is where some of the, um, business school education that we all, some of us receive.
[00:09:58] It's maybe starting to be like, Oh, this is what they were talking about.
[00:10:01] Mikkel: Yeah, yeah. Oh, they didn't teach me growth at all costs. I learned that by doing, you know. I can spend a lot of money here to grow.
[00:10:09] Cool. So, what does this mean,
[00:10:11] Toni: I think one, one thing that's kind of, you know, we forgot to almost is and this might be an outcome or result or something. I'm not quite sure where to, where to put this on input. the buying process is getting a little bit more sophisticated. Um, people are not making the snap, stupid, silly buying decisions anymore.
[00:10:27] There's. Usually CFO involved. There are many other people involved. A lot of people around the table are more like, ah, let's just not buy it. Um, and, uh, especially when you suddenly have eight or nine buyers. Uh, that need to make the decision, chances just simply go up simply by math that one is going to say no.
[00:10:46] Uh, and, and sometimes that's even enough to torpedo the deal. Right. And, and, and, you know, let's see, let's see if we're going to get out of that conundrum eventually, but those are all, you know, almost the micro, the micro things that are happening that's maybe causing some of the micro issues.
[00:11:00] Mikkel: Yeah. I think it's also like we talked about in a previous episode that today to book a meeting, it's way more touches and that then also follows this way more touch points where you can mess up and potentially lose out. It's the same in a sales scenario. If you have more meetings that, you know, puts more pressure on you as a seller as well to do a great job in every single meeting.
[00:11:21] Some.
[00:11:22] Toni: yeah, I also got to say, I mean, um, in addition to that. and I think this was also some pavilion research one or two months ago, they found that September was actually the biggest layoff month in a year in that specific cohort that they, that they interviewed.
[00:11:38] So I'm not sure if it really was in amount, but in terms of, you know, their, their way of questioning how many of you have laid off people this month. And I think it was the highest across the whole year. Um, and, um, we've seen kind of some similar stuff going on right now where people are, you know, still laying off folks, like it's still going on and it feels, it almost feels like it's, it's another wave.
[00:11:59] We had this, you know, late of last year, early this year, then the summer was like, Oh, it's, it's looking better now. and then we have kind of the current wave that's. to a degree going on and kind of causing this, which then at the same time, if, if you're laying off people, it's not like you are, um, going to be super keen on buying new software, you know, for that, for that area, the last thing you're going to be doing now for a while is buying new software in that area.
[00:12:23] Right. And kind of all of those micro things that kind of, uh, adding up in the end.
[00:12:27] Mikkel: Yeah, I mean, you, you did this massive exercise to extend your runway. Are you really now gonna go and just, uh, you know, make it rain with cash to buy some more shelfware? It's like, no, it's, it's, that's what you don't want right now.
[00:12:38] So, what are folks to do? Yeah. What are folks to do?
[00:12:42] Toni: Yeah. So I think, um, um, I think what's starting to become clear across, across the table, when I talk to CROs and some of those communities, some of those like sales calls and so forth, it's like, um, I think they're starting to set in a little bit of a tiredness of, you know, the quick fix.
[00:13:00] Mikkel: Yeah.
[00:13:00] Toni: There's increasingly so, um, people are just not buying that slogan anymore.
[00:13:06] It's like, oh, you know, just this thing and ROI goes up and, and it's not even about the ROI thing. It's also just about this whole mentality of, Hey, you just need to. You just need to implement PLG.
[00:13:15] Mikkel: Yeah. Yeah. Yeah. And then done.
[00:13:17] Toni: First of all, it's easy to do. And second of all, it's going to have fantastic consequences. I think all of that quick fix mentality, I think of just go out the window.
[00:13:26] I think people are starting to get tired of it. Um, they bought the snake all too many times and it didn't work out. Right. Um, and I think what's, what's happening instead is that people are more and more, um, starting to think about, well, what is the, what is the real fix?
[00:13:40] Mikkel: Yeah.
[00:13:40] Toni: What's, and you know, maybe even let's move away from this fix thing.
[00:13:44] What's the real solution here? What is really broken? And what can we actually do about this? Right? Because it's not just hiring another sales rep or hiring, you know, uh, someone to coach the salespeople or adding another campaign or building a new feature, all of these things, and then there are like myriads of versions of that, all of these things I feel have been in it.
[00:14:09] A craze been going through in the last year and a half, everyone says, Hey, you know, okay, you know, it's focused on net retention rate. Let's get that up and let's focus on the customer because hey, there's cheapest revenue. Well, didn't work net dollar retention down. It's now what, what do you say? It's now land and
[00:14:26] Mikkel: Yeah, yeah.
[00:14:28] Toni: Oh, let's,
[00:14:28] let's be more efficient on CAC Payback. You know, let's fire some people, get more, you know, have only the, the, the good reps survive. Didn't work out either. Right. I mean, and the list goes fucking off. I mean, this is, this doesn't stop here. Right. So, and I think the, um, I think what we wanted to kind of almost do today is, um, take a couple of steps back and put our, um, early 2000s business school goggles on
[00:14:56] Mikkel: Yeah.
[00:14:57] Toni: and be like, well, let's look at this category. Let's look at this problem here. Uh, through sober, sober eyes, um, and, um, and see what's, see what's left. Um, and we were kind of looking at, you know, this really, you know, from a go to market execution perspective. So we could be talking about product and you need to have a differentiated offering and it needs to be a good product and you need to produce it cheaply.
[00:15:20] And all of that stuff, we're going to park somewhere in another corner. we're, we're, we're here talking about sales and marketing and customer success. Um, and, um. And really kind of, we found, you know, three different areas we maybe want to discuss today. And let's, let's see where we go with this. Um, so number one, and we have been on this show talking the other direction previously.
[00:15:43] Mikkel: Yeah. I love disagreeing with myself.
[00:15:45] Toni: and, um, it's just another, it's just another cohort of you,
[00:15:48] Mikkel: Yeah, we'll have grown a lot since then.
[00:15:51] Toni: Um,
[00:15:52] so one of those things is, should you allow a customer in? that you're fairly sure of it's going to churn in a year,
[00:15:59] Mikkel: Yeah, the churn and burn.
[00:16:01] Toni: should you do it? And, and my answer has always been, yeah, yes, yes, you should. And you know, people that are listening and maybe investors and stuff like, Oh, you know, that's really stupid, but you know, when you're the CRO on the ground and you kind of need to hit your targets and you know, when, when really the VC is, is value and growth in general, it's almost like, well.
[00:16:24] Is the next round less than a year away? Yes. Okay. Well, then that additional customer is going to help me build a better case with that VC, right? That they're churning after the round. Well, you know. That's, that's after the round problem
[00:16:39] Mikkel: Yeah. Yeah.
[00:16:41] Toni: and, and we have plenty of those anyway. Right. Um, and then, you know, you could make a pretty clear and, and then the other things, you know, casting down and it's like, well, who knows, maybe this customer isn't churning, you know, who are we to know?
[00:16:52] Right.
[00:16:53] Mikkel: I think it's also just the classic, tell me how I'm measured and I'll tell you how I'll behave kind of scenario.
[00:16:59] Right. It's a very real one.
[00:17:01] Toni: And, and kind of the, another way to look at this. is, um, almost through a lens of, okay, instead of CAC Payback, um, and you know, this is, you know, 2D almost boring. Well, we should be looking at it as customer life, you know, CAC to customer lifetime, right?
[00:17:20] Uh, value. Um, and the idea almost would need to be, Well, the customers that you want to acquire, you at least want to have, um, a 3x on your, on your lifetime value, right? To, to CAC. Um, and we can talk about this. So what does it mean if you spend 1, 000 to acquire someone you want to over the lifetime of this customer?
[00:17:39] Want to have at least 4, 000 out, kind of, that's usually the ratio, kind of a four, four X, um, and the idea should actually be, well, everyone who's not cutting this, and let's just say instead of four, you set the bar at three, everyone who doesn't seem like they're ever going to cut this should be acquired them in the first place, right?
[00:17:58] So what does that mean? Well, number one, you're, you're starting to have a, um, a focus on acquiring profitable customers. Profitable customers. I don't think we've ever heard that term before. Um, and it's very similar to, um, the early days of industrialization of like, well, if it takes me 10 years to assemble the chair.
[00:18:20] I can't sell it for nine.
[00:18:22] Mikkel: No,
[00:18:24] Toni: That doesn't
[00:18:24] Mikkel: no, no,
[00:18:25] Toni: Can't do it. Um, and, uh, can't discount you. Sorry. It doesn't work, sir. It needs to be sold for 11. You know, there's just, and if you don't want to have it for 11, I understand that, but they need to go somewhere else. Um, and, uh, and yes, then you could have a competitive advantage if someone is assembling the same chair for eight euros.
[00:18:42] It's like, Oh, that's a problem for me now. I need to figure out how to get down to eight. Right. And in our world, you know, we need to start like, yes, you know, a plus one on the customer side is, is cool and everything, but you know, is it a, you know, is it a profitable transaction that you're making there?
[00:18:57] Um, and it becomes very quickly unprofitable or not the right choice if you take the whole VC stuff out of the equation. If you're not optimizing for the next VC around that is, you know, wants to see that specific metric going up. But if you're really thinking about who is going to be profitable for us, then suddenly by itself, it's going to be like, well, you know, we probably need like them to renew at least twice.
[00:19:19] Uh, for this to make sense, uh, is that customer going to renew twice? No, it's not. Problem, right? So rather not. So this is difficult. This is a difficult decision, difficult switch, difficult everything in an organization, because to a large degree, and this is includes my own, there's almost like an. DNA thing attached to this.
[00:19:39] Like, why would we say no to a customer? That's, it doesn't, you know, in, in real world, that's a real thing. It's a real thing. Yeah. Yes. You don't want to have some customers. Um, and we all learned this in, you know. You know, microeconomics and school and stuff, um, but, but not here anymore. Right. the other thing is also, so what does inevitably will mean for your Anubis acquisition is you will, instead of a hundred customers, you will only be able to acquire 80
[00:20:06] because you probably have 10 to 20%, whatever the number might be of customers that you acquire that will not turn profitable that it could even say today.
[00:20:15] Will not turn profitable. Right. It's kind of with fairly high conviction. You can say like, that's probably not going to work. Are you going to get it wrong once in a while? Yes. But he could say that. Right. and what that means, yes, your, your, your initial new business going down that you're going to be able to acquire, but in return, it actually also means you can reduce the sales team that you have. Instead of closing a hundred deals, you actually can really only close 80. and that means you need fewer reps to cycle through this. What's going to happen also is that you're going to reduce, you know, the worst 20 percent of reps.
[00:20:48] Mikkel: Yeah.
[00:20:49] Toni: you know, first, meaning the reps that you have left will be, uh, higher on conversion, higher on ACV, you know, show all the right signs, yada yada.
[00:20:58] Right. Uh, which basically means you basically, uh, improve the efficiency of the sales team by taking out the, the bottom 20%. Yeah. Yeah. And if you kind of find this all the way up, you probably might see that, you know, those 20 bottom percent of, you know, bad ish customers are connected to some stuff that you're doing on the top end of the funnel that's kind of leading to this.
[00:21:20] Yeah. Yeah. Sometimes you can, sometimes you can't. Right. Great. You can cut this out now as well, right? Yeah. Um, so this is just one way of. Yes, CAC Payback, I think it's super operationally important and helpful. Um, but you know, in this sense, it's starting to be almost damaging because it's telling you, you should acquire customers that are not profitable for you, figuring out a way to almost switch to a, well, we need customers that renew twice, um, you know, way.
[00:21:48] I think that starts to be, uh, the more sensible way to do it when. When I bought software back in like 2015, what I heard often on sales calls, I'm not sure if this is still a thing, you know, the sales rep, and this was kind of a thing they just said, but sales reps were sometimes saying, well, you know, we really need you to, renew at least once for this to make sense.
[00:22:07] Right. So they were almost pointing out the CAC Payback implication. Um, and I think some of that thinking, uh, whether or not fake or not, I think some of that should actually come back. Um, right. And I think the Northstar metric for you to kind of think about here is. CAC to Customer Lifetime Value. So this was one topic, one small topic, um, which means, you know, just okay.
[00:22:32] Customers aren't good enough anymore, right? You need good customers for you to kind of turn profitable and be profitable going forward.
[00:22:38] the next one is maybe a bit more divisive, it's, you know, okay. Okay. People it's not enough anymore. And, um. Um, You know, present company not excluded.
[00:22:50] Mikkel: Yeah, give us that review.
[00:22:53] Toni: means
[00:22:53] Mikkel: Give us it.
[00:22:55] Toni: that, um, you know, people that were successful in the last 10 years, that might just not be the bar anymore for the next 10 years. I think this is what's, this is what's happening to a degree. And I think some of this is also echoed by, uh,
[00:23:11] Jacco
[00:23:12] and then some of those folks, Hey, you know, you really have bad sales reps.
[00:23:15] That's really what's happening. Um, he also talks about, well, you have kind of bad leaders that grew up between 2012 and 2022. Myself basically, um, who don't understand this whole thing and therefore making obviously bad decisions. and I think the same is true for marketers for CS across the whole board. Right?
[00:23:35] Mikkel: Yeah I mean we talked about it, I mean, we grew up on this stuff and it was easier. So if you ran a marketing campaign, it was a whole lot easier to go and start Google Ads, Facebook audiences and get something through, right? But now with the cost rising, conversion rates down funnel also impacted, it gets a whole lot harder, right?
[00:23:55] So if, if that was your tool. Basically, now we need to go and find a couple of other things if it's the marketing side. Then you know what? Creative actually gets really important. Can you turn a really good message that stands out? Can you have created a high converting landing page and a consistent journey after that fact?
[00:24:11] Are you following up within, you know, minutes and not days with those leads and so on and so on? So I think, you know, there are some. Almost basic skills that are now paramount to success that weren't in the last 5 10 years. Sure, there were folks doing it because they kind of understood also some of the compound you can bake in.
[00:24:30] But those things, they become critical. And if you've not grown up on it, and especially not faced that challenge as, you know, a lot of folks are facing now, then there's a lot of learning to be, to be made.
[00:24:40] Toni: No absolutely and I think this does translate into I think there are expectations we need to, both as employees coming to the workplace, and as, you know, leaders, know, working with those employees. I don't know, it's almost like a kind of, you know, two sided world here. But like in, in, in all cases, I think we need to start increasing our standards of what we think is, is right, or is acceptable, or is what's necessary to survive in this time.
[00:25:10] And, um, I think for. You know, this goes all the way down to simple stuff. You know, sales reps need to be better at discovery. Apparently this is, you know, Chris Orlob talked about this, you know, Jacco talked about this. Discovery is where you lose most of your deals.
[00:25:23] Mikkel: Yeah.
[00:25:24] Toni: That's. Simply a skill that you can learn, right?
[00:25:28] So this is, I'm learning this skill right now, by the way. So it's like, it's not impossible and it doesn't mean that everyone is going to be good at this, but this is certainly a skill that you can teach and kind of, you know, work on. and then you need to have the disciplined, hardworking mentality, you know, of those salespeople to.
[00:25:44] You know, keep doing that stuff and keep getting better at this stuff and so forth. Right. And, and if, if there are people that don't want to go down that path, okay, but then that's probably not a fit anymore. Right. And I think, um, kind of this whole decision making around who is good for the team is like, well, this is, is a filled seat better than an empty seat, which was very much the case like two or three years ago.
[00:26:05] Um, I think that's stopped now already, but I would even go further. It's like a mediocre. Uh, seed that's filled, is that better than an empty seat? Um, and I think, um, you know, we, we, we basically need to start asking ourselves those questions, right. And, and basically pushing up the bar. but again, from both sides, right.
[00:26:23] I think as an, as employees come into the workplace, you kind of also, you know, want to see the same thing from, from your leaders. Right. So this is kind of a two thing. Uh, but at the end of the day, it's also the standard that you apply to yourself. And that goes for leaders and employees as like the standards you apply to yourself, that simply need to be higher now, right?
[00:26:40] Period. and you know, we were joking before the, before the show, right? Some people say like, Hey, the golden age of SaaS is over. I just believe the convenient age of SaaS is over, right? Kind of, it's just not as simple and it's not that convenient anymore. Um, and I think that that needs to translate to.
[00:26:56] Uh, real business change and real, that sometimes means real, real talent change as well. Right. and, uh, maybe some of those companies that we all try to flee, maybe there's some, some areas that they've figured out and, you know, they're crazy focused on, you know, which people they're going to take on and, you know, how they're building them out and, how much, honestly, how much work they expect from them.
[00:27:18] it's, there's a whole other, there's a whole other area where I think we can, um, we can. Uh, learn from and take some of those learnings and kind of adopt and learn from those older companies.
[00:27:27] Mikkel: But it's so funny because, uh, in the prep for this, when looking at GTM execution, you know what all those BCG, McKinsey's, all those folks talked about, the importance, number one, most critical thing, right people with the right skill set that was like, this is business 1 0 1. And I think what happened back then when, you know, you could raise a lot of cash, you could succeed with. Just mediocre effort. Then it was totally legit to go and hire someone straight out of school. So you had actually a very, you had a lot of junior folks on the team and a few that had some experience and that was good enough, but it doesn't work out today.
[00:28:04] And I think the job becomes looking at that team and saying, Hey, how is the balance of the team in terms of experience and performance, and then asking, you know, the very painful question.
[00:28:17] Do we need to cut some are there some we can train and actually lift up and how like how do we do that? And it will be very much dependent on the business how much time you have what outcomes you're gunning for but I think it's just You know those folks on the team if you're a leader, they represent a significant amount of burn every single month every single month
[00:28:38] Toni: And, and you being like, ah, you know, it's kind of good enough, you know,
[00:28:42] Mikkel: We are good friends
[00:28:43] Toni: that is, that is, that is where the problem actually kicks in.
[00:28:46] It's like, you need to, um, I think it needs to be, those current times kind of sometimes required to be a little bit more tough around this,
[00:28:53] Mikkel: this. Yeah. And I think we almost sound a bit American talking about this subject, you know, Hey, maybe you should cut some folks, but I think it's just very clear that we've come from a period where we could construct teams like that.
[00:29:04] And it doesn't cut it anymore. It doesn't work anymore. And, and it's, it totally sucks if you're in that position and have to make some tough decisions. But ultimately, if you're a leader.
[00:29:15] Toni: No, but also don't get me wrong, right? You, um, you know, some people will be like, well, but you can coach them and teach them and enable them. And I think that's totally true.
[00:29:23] I think many, many times, uh, the employee failing is because the company failed them, you know, more than anything else. But in reality, you know, with the timeline and the skills that you and resource that you have now. It's like, well, can you even afford to try and kind of improve this now? Do you, do you have time to do it?
[00:29:40] Because this whole enablement piece, it does take some time, right? and you might've screwed some things up so badly already. That, you know, unscrewing it up will take even more time, right? So it's like, and you need to figure out, you know, what your best path through this is. And sometimes it means, sometimes it means kind of parting ways for folks.
[00:29:58] Yeah. Jesus. Yeah. This is like,
[00:30:00] Mikkel: It's
[00:30:01] Toni: a really, like a chief revenue officer talk here today. They just fire
[00:30:04] Mikkel: fire that. God! No, but it is a thing, like, there is a runway that the business has. And if that runway is 24 months, and you have half your team that you need to upskill, It's going to take you 12 months to upscale and then some are not going to succeed and then, you know, so the math just won't work out.
[00:30:22] I'm sorry. It's terrible. And it's not the necessarily just the team's fault. These were the times. These were the times. Um, so it sucks.
[00:30:32] Toni: so
[00:30:32] we talked about okay, customers. We talked about okay, people not being enough anymore. Um, I think the last thing we have on our list is, okay, infrastructure, you know, running a go to market, which is okay.
[00:30:44] Infrastructure, right. And, um, I've been there myself, you know, we've seen this. I mean, it's like, you have a spreadsheet for this, you have, you know, an Asana for that, you have a Salesforce report for this. Like all of that stuff that, you know, all of that stuff is okay. Don't get me wrong. It works, um, to, to a degree, but I think kind of up, you know, upskilling this and leveling this up and into a degree where, uh, actually you can, uh, you know, manage your go to market execution.
[00:31:10] I think that increasingly so is something that, uh, is required for you to run good go to market execution, right? And you can say, sure, this kind of maybe a Growblocks topic.
[00:31:20] I think there are many other ways to also think about it in terms of like, okay, how, how can we actually kind of run this ship, uh, in a much, much tighter way?
[00:31:28] How can we integrate all of these things without over engineering it? Don't get me wrong, right? You don't want to fall off the spectrum on the other side either. but you know, this, all of this fragmented stuff that we're seeing out there, all those. poorly run, uh, you know, companies that, uh, basically kind of not poorly run because they have the wrong people or the wrong customers.
[00:31:48] They're just not, you know, having this integrated in the right way to even have those conversations, right? Kind of the infrastructure piece. Think about, think about it as the backbone of your go to market. And if it's not there, if it's scrappy, if it's shitty, that will inevitably have an impact on how you're going to be able to execute.
[00:32:07] Part of that conversation is revenue, revenue operations. Yes. Yes. I think part of that conversation is revenue architecture. So, you know, some folks kind of more and more wake up to this, uh, obviously kind of winning by design, but also talk to the Cremanski folks out of, uh, out of Germany's. Predominantly, actually, they see company, you know, of a company and company and company, and it's, it's a great product.
[00:32:30] They have good salespeople. They're just putting the pieces not together in the right way. Right.
[00:32:35] Mikkel: I think one very real example is I came from a, uh, PLG self serve. Kind of business. And, uh, we didn't have any instrumentation to measure the self signup, right? We didn't have those stages defined. We didn't have the measurements in place.
[00:32:49] We just had a traffic and then signups. So we had no clue what was happening in between. And I think this was the result of the whole, hey, we need to move fast. Let's just implement, let's go, right? And I think now you need to kind of maybe pause for a minute and say, hey, Sure, we need to move fast, but let's also make sure we get the implementation or instrumentation right, so we actually know what is happening in our business.
[00:33:11] Toni: And, you know, we, we kind of have sometimes a saying, you know, the, the best performing companies are usually also the ones that are the worst run. And, uh, you know, once some of that magical growth comes down because of a variety of reasons, suddenly you start implementing all of those, uh, you know, management systems, so to speak, in order to solidify or kind of get those things fixed again. Right. And, and I know for a fact in the heydays of H& M, so the fashion brand, um, And this is, this goes back to maybe 2018.
[00:33:44] I'm not sure if it was still the heydays, but it's like, they were still growing like crazy. Um, they were managing this whole conglomerate through like hundreds and thousands of spreadsheets.
[00:33:54] Spreadsheets.
[00:33:56] right? And this is not for, not only top line, uh, line planning and stuff, for the whole thing, basically kind of spreadsheets.
[00:34:02] And I think if you... have a really successful, basically product market fit, right? If, if your product is great, you'd being, you know, ripped into the market,
[00:34:12] Mikkel: just
[00:34:12] Toni: almost can't sell enough. Um, all of, all of these things that kind of fall by the wayside and who gives a shit, honestly, right? Kind of, you, you would just be wasting time trying to fix this.
[00:34:22] You should just instead hire more salespeople so you know someone can take those calls.
[00:34:26] Mikkel: Yeah.
[00:34:27] Toni: That time has stopped.. Yeah. For like 95 percent of the folks out there. Uh, the time is very much done. It's like, well, not more salespeople, but we need to run a more efficient engineer, we to run a more efficient shop and in order to achieve that, you need to have instrumentation in place that lets you, you know, uh, puts you in a place to actually do it.
[00:34:46] And if you think about manufacturing businesses and, you know, all. Kind of the old school stuff. Um, are they just having kind of the machine there and kind of look at this once in a while? I was like, yeah, it runs good enough.
[00:34:59] Mikkel: What's that lamp blinking? Is this supposed to blink?
[00:35:01] Toni: It's probably like the engine light in my car. It probably doesn't matter. You know, it blinks all the time, you know? and, um, you know, think about how they are running their production. Think about that. And then, take this in. And then look at your go to market and are like, are you running it the same way?
[00:35:16] Or are you running the scrappy amateur version of that? Um, and likely you, you, you're running the scrappy amateur version of it, which, you know, again, I don't want to offend anyone. We're offending a lot of people here. Just fire everyone.
[00:35:28] Mikkel: We are in it together. We're in it together, at least.
[00:35:31] Toni: and, um, and kind of look at this and like, no, this is amateur, this is amateur BS.
[00:35:36] We need to upgrade this. Um, and to a degree, it's almost like technical debt in your product, right? It's. Is it going to add something? No, it doesn't feel like it, right? You're fixing technical debt in your product and like, oh, who cares? Um, but these things will drag you down and drag you under, uh, from a product production side.
[00:35:55] And it's the same thing for go to market as well.
[00:35:57] Mikkel: Yeah. And the customer will be on the recipient of that. So I think what is.
[00:36:02] A pretty cool thing is if you actually achieve in bringing this from okay to, let's say, good or great. Just imagine the point in time where all of a sudden the stories start changing that actually now the sales cycle length, they're getting shorter. Quota completion are improving. The companies that actually managed to build, a solid engine of profitable customers, a great team and a solid infrastructure and setup.
[00:36:29] They're gonna be set up way better for success. Yeah, I think so.
[00:36:33] Toni: No that's absolutely what it is. Let's see if those times come back.. Who knows
[00:36:40] They're going to wrap it up, I think, you know, all the, all the errors and pointers are still going in the wrong direction. At least kind of based on, you know, recent benchmarks from, uh, OpenView. And I think what we are saying is like, just, okay, just simply isn't good enough anymore. Uh, okay. Customers that stay with you for a year, maybe not good enough anymore.
[00:37:00] Okay. Teams that, you know, don't have a really good expert view and, you know, working hard and figuring things out, not good enough anymore. Your spreadsheet and, you know, business system here and so forth, set up that you're trying to use in order to run your go to market, not good enough anymore. Upgrade all of that stuff.
[00:37:15] Mikkel: That's it. That's it. you everyone. Have a good one. Bye. Bye bye. Phew.