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Hey, everyone.
I'm so excited for today's episode.
We have Ben Orenstein with us.
Ben is co-host of the Art of Product podcast and co-founder
of Tuple Tuple, which is one of the most admired independent
software companies out there today.
I'm so excited to have you on.
Ben Orenstein: Thank you.
The most admired is uh application I have not heard before.
That's pretty great.
Michele Hansen: Really, I feel like that that's kind of how
people think of Tuple Tuple.
Like.
Ben Orenstein: As you were saying, it kind of resonated.
I was like, oh yeah, I guess people do seem to like us.
It's, it's that weird thing where like, I am aware of all of our flaws,
but people have a more nuance or like a sort of more holistic view of us.
And I was just thinking like of like various Twitter threads and whatnot.
It's like, oh yeah.
I guess people are mostly quite positive.
Michele Hansen: Yeah.
So the genesis of this conversation today was we met at Founder Summit.
Um, and you were supposed to give a talk on sales for founders, which is a topic
we've talked a lot about on this show.
And is it like a really tough thing?
Um, for first time founders, especially, uh, you know, a tough thing to learn.
And so you were supposed to give a talk on that.
Unfortunately we're unable to, and I was like super excited for that talk
and so sad it didn't happen and so I thought it would really fun if you got a
chance to talk about sales for founders.
Ben Orenstein: Yeah.
I mean, that sounds great.
I, I have, I have the outline.
I have a table of contents of a book that I would like, kind of wanted to write, but
it wasn't probably gonna follow up with, and I have this talk that almost happened,
but then I went on a taco crawl in Mexico City and got quite sick, don't do that
the night before you're supposed to say.
Um, And so, yeah, I'm stoked to talk about this.
I have, I've I've learned some lessons, I think it's, it's a bit of a limited data
set given that I have only done sales for one company, but I think probably there
are some lessons in here that I learned going from like being an engineer who
likes efficiency and not understanding procurement and IT and pricing and the
sales process and what, even as a PO.
And I think I, I can probably pass on some, some stuff that
is possibly going to be useful.
Michele Hansen: Yeah.
I mean, I think that point there is something that, that really hits home
that, you know, Mathias and I talk about is like, wait, why can't they
just like sign up online for an account?
And I'm like, no, they have like, they have procurement.
Like you need to use their portal.
And like, it's like, why, why can't we just build something that they can
just upload all of those things to, and then we do it and then it's automated.
It's like, you can the bureaucracy of each enterprise company.
Cause they're all, they all have their own special way of doing it
and they all want you to conform to their special way of doing it.
And the idea of just signing up for something online is confusingly
simple to the point of being imposed.
Ben Orenstein: Yeah.
So the, the outline for this book that I was going to write in the intro,
the, of the first topic heading is your intuition is right, sales is kind of.
Like I kept fighting it for a while where I was like, but
hold on, this is, this is dumb.
This doesn't make sense.
Why, why can't it work like this?
And eventually you sort of just learned to like, you can't refactor the sales
process of everyone you're talking to.
And, there are things you can push back on, which I think is kind
of an interesting topic as well.
But overall you are dealing with a thing that is inefficient.
It is, is not the most efficient way to get this done.
And so you need to sort of, you need to act accordingly and respond to
that reality rather than fighting it.
Michele Hansen: So you mentioned there's some key lessons that you've learned.
Ben Orenstein: Yeah.
Michele Hansen: What's the high level of those lessons.
Ben Orenstein: It's kind of a lot, I would say there's, so again, I'll throw this
caveat out there because it's important, which is I have done this for one company.
And so our tool is a um, something targeted at developers.
So it's adopted by engineering teams and we make it easy for the teams
to come in and get in and try it.
And the way our sales process usually gets kicked off is the engineers try it.
They like it.
They ask someone to buy it over and procure.
They contact sales at Tupelo, and then now the sales process has begun.
So yeah, so all of this advice here, just, you know, just, just be aware,
like, it's not like I've done this for many, like I ha I haven't seen enough
different viewpoints to know for sure if this works all the time, but this
is what has worked for us, and so I'll speak kind of authoritatively from our.
And at this point we've done millions of dollars of enterprise deals at this point.
We closed like large six-figure deals, multi-year deals, deals
with fortune five companies.
So it's, we've had success using our approach and using our software.
So maybe this is so I can at least sort of say, like, this works for us.
Maybe it works for you, but you asked for a big picture things.
One, I actually kind of touched on, which is that I think a bottom up sales process
is vastly then a top-down sales process.
So the fact that engineering has already tried our product and liked it and then
asked for it means that when the sales process gets kicked off more often than
not, we're just sort of taking orders.
Like we are helping procurement by the software and not selling the company
or selling some high level decision maker on the software and try to
get them to inflict it on their uh,
Michele Hansen: That's also how we do sales as well, like we,
we never did any cold outreach.
I don't think we've ever really tried to it to someone who
wasn't already interested in it.
And in many ways, I think we kind of took inspiration from slack
because I feel like that was a lot of their early growth as well.
Was the engineering teams using it by like liking it, wanting to use
it, other teams hearing about it.
And then, and then it's just a matter of filling in.
Ben Orenstein: Yeah.
Michele Hansen: so to speak rather than having to do cold outreach and
pitching and stuff like that, which I guess I've, I've only done sales as a
founder from that perspective as well.
But I did work at an agency as my first job out of college
at a web development agency.
And we were going out and pitching and making proposals and replying to RFP.
Dude that was so much work.
And most of it led to absolutely nothing.
And I think that's why I love this bottom up approach to sales is.
Ben Orenstein: Yeah, I think it's just a nicer way to be.
And I think if, I think, especially if you're a bootstrapped company,
it makes life a lot easier.
Like the sales process is much simpler when they're already sold on the thing.
It's easier on from your side, and I also think you're more likely to succeed.
Like it feels like to me getting a tool, selling a tool from the top of the org
chart and then having that decision get made and then having it sort of trickled
down, feels like a recipe for bad fit.
Like you could imagine, like the software is being foisted on you by someone
two levels above you in the org chart.
And you're like, oh, I don't even like this tool.
It doesn't do what I want it to do, or it doesn't do what
we were trying to accomplish.
I feel like it would probably lead to worse outcomes uh, that approach.
Michele Hansen: I'm curious, you know, I don't want to oversimplify the sales
process because we do have a lot of times when you know that person on the
engineering team or even that team and their manager really liked you Geocodio,
for example, but then they have to sell it to their director or their
VP and they bring us to help sell it.
And it's not just like that.
They like it.
And then a PO shows up that does happen.
And that is awesome when that happens, but rarely does that happen and more
so there is some sort, but there's not only like basically we are
helping that team sell the product.
And then of course there's, there's the whole negotiation side of things.
Which speaking back to founder summit was kind of fun because I
got to live one of those Twitter threads where people ask, what could
you give a talk on with no notice.
And I did that on negotiations when your talk unable to happen
um, which was pretty fun.
And so I'm curious, like, what are your experiences with when, like, do you have
that happen when a team needs you to help sell the rest of the organization onto.
Ben Orenstein: Um, That is totally like a high leverage opportunity, I would say.
So that does happen with us so often it is a an engineer somewhere towards
the bottom of the org chart, trying to sell it to their team lead or
a team lead, trying to sell it to a director or a VP or something.
And those are pretty critical conversations actually like that, that,
that affects that can have a big impact.
And so the main thing we've done around this is we made a thing.
We call it the boss page, which helps is like basically like our best
attempt to sell Tupelo to someone a little bit further up the org chart.
Where it talks about the benefits of pair programming.
Like what's likely to come like the benefits a slightly higher level
manager might care about, and also answers some common objections or
questions that people would have.
And I think there's a lot more, I think there's more we could do here.
Like this is sort of just a simple, like one pager that we send to people
as a trial is ending saying, Hey, if you want some help selling this to
your boss, here's something we made.
But I think we could go even further on that.
Michele Hansen: So you just, you just touched on something that.
I think is a key part of this, which is letting people try it for free
or very cheaply before they need, you know to be able to use like the
corporate credit card or, or, you know, get a PO for it or whatnot.
So you mentioned that after the free trial, so, so what is the sort of
Tupelo model from that perspective?
Ben Orenstein: Um, Right now we have a 14 day free trial
with no credit card required.
Michele Hansen: And you mentioned right now, you have that I'm
curious, has that changed over.
Ben Orenstein: Yes, it's changed several times actually.
So immediately before that it was a 14 day trial with credit card required
upfront which we switched away from because so many of our customers don't
actually have a company credit card.
So it was like, Hey, I want to try this tool.
Oh, it needs to require a credit card.
Let me go ask my boss for their credit card.
Oh, I haven't tried the thing that I'm asking for the credit
card for, which is awkward.
And people have this sort of discomfort around, oh, well, what
if you start charging my card?
I'm not aware of it, or you like, I might forget.
And so we, we moved to this, this current model, which has been popular and I'm
happier with, but even before that um, we experimented with a number of different
ways of getting people into the product.
Uh, so in the very early days, we actually charged a hundred dollars
flat for your first month for a limited usage and then we would start billing
by user, after that month was up.
And that was sort of intentionally a high bar that we set where
we, we made it a little bit.
You had to sort of show some commitment to get into the product.
And we did that because we w we didn't want to grow too fast at the time.
Like we were just, we were getting exposure to lots of different environments
and user requests and things like that.
And we didn't want to get overwhelmed with new people coming in the door.
And we also wanted people to try to take the trial very seriously.
So it slowed things down.
Like we had fewer trials for sure, but it was kinda interesting that our
trial conversion rate was super high.
I was like 60% or something because like, people are like,
well, we paid a hundred bucks.
We have to try this thing now.
And so we didn't have, we had very few of those trials where it's like,
oh, they never really got started.
They never really tried it.
And then even before that in the very earliest days, I was
pre-selling the tool by the year.
And so would say like, we're looking for like a core group of
teams to become our initial users.
And so we want people that are really committed are willing to like stick
with us as we improve this thing.
So if you're interested, you have to like pay per seat per year to get in.
Michele Hansen: That's really interesting.
Cause I, I feel like I hear in that, that you have learned a lot
about how teams acquire software.
Ben Orenstein: Yeah, for sure.
That was, I mean, that was the big learning for me.
I originally thought that the customers for Tupelo were going to be freelanced.
Just like individual developers working with clients or something.
And I was like, it didn't even occur to me that like, no, no, your
ideal customer is a whole bunch of developers on the team, obviously.
And it just didn't click.
And so there was like, there was a lot of learning that went on as we, as we
actually launched and saw who was using it and how, and then how they bought it.
And you know, me just being like, can't you just go put the credit
card in and they'd be like, no, no, we can't go put the credit card in.
Michele Hansen: So when you have those people who are using the, the $100
free trial, which sounds like it was like the, I mean, the thing about Tuple
you have this network effect, right?
Like the more people within the organization are using it,
the more value the organization is getting out of it, right?
Like if you're the only one Tuple in your organization, you do not have
anyone to Tupelo within the organization.
So like, you'd need at least one other, one other person
to use it with ideally a lot.
And when you had that a hundred dollar For the trial level, I'm
curious, do you know who was making that purchase at that point?
Ben Orenstein: Um, Do I know who
Michele Hansen: Like who was actually putting in the credit card?
Cause you said the next step you switched to having credit card, trying,
credit card required for a free trial.
And that didn't really work because the people who wanted to try
it didn't have the credit card.
So it sounds like there was a shift in the buyer when you changed from paid
trial to free trial with credit card.
Ben Orenstein: Weirdly enough people with sometimes DME and say, I wanted
to try Tuple so badly that I paid for the a hundred dollars myself on my
Michele Hansen: Wow.
Ben Orenstein: Yeah.
Which is cool.
I mean, it's a vote of confidence, right?
That was like awesome.
Our reputation was really good.
And so like people wanted to try the software but it was also
like, okay, that's seems wrong.
People probably shouldn't be shelling out a hundred dollars
personally to try or software.
Michele Hansen: I mean, I hope they got reimbursed later.
Once
Ben Orenstein: Hopefully, although it's like, you know, it's one of those things
where we're getting a hundred bucks back.
It's probably not quite worth it from the company, you know?
Michele Hansen: That is really interesting.
So then when you shifted to free trial credit card required, were
you thinking that people would continue to use their personal cards
Ben Orenstein: They did.
That happened a lot because they still didn't have a company credit card and
they still want to try the software.
It just got a bit easier.
It got cheaper basically.
Whereas before they would like eat the a hundred bucks to try it or
slash get reimbursed, now they would put their personal card down and then
be like, okay, I have to remember to swap this out for the company card.
If we like.
And so a thing we kept seeing happened was people would try it on one credit
card and swap like right the day before the trial was supposed to end or cancel.
And we'd be like, oh no, why'd you cancel?
And be like, oh no, I liked it.
We just are waiting on approval to use the company credit card.
And so we have to wait for that to get, get a yes on that before I
can go grab the card and put it in.
Michele Hansen: So let's get down to like nitty-gritty here.
How did you figure that insight out that what was happening was that people were
putting in their personal card and then either canceling it or maybe even doing
a chargeback or, and then trying to get it switched onto their personal card.
Take me into how that insight developed that the people basically, you need
to sell this within the organization, don't have access to a credit.
Ben Orenstein: Um, I don't remember exactly how I got that insight.
I would say that we are pretty, especially in the early days as very aggressive
about talking to not aggressive, but I was, you know, I was trying to talk
to everyone or like email everyone, so like if we had a failed trial like
that, if a trial canceled that looked like it was good, I would email them
and say, Hey, what was going on?
Or, and I think we even had automated emails for when people would
cancel or trials wouldn't succeed.
We were sort of like, we have all these like customer feedback traps built
into the product and built into the process so that we're sort of always
asking people like what's going on.
And also at this time where we were experimenting with like the a
hundred dollars upfront approach, I was DM-ing people a lot on Twitter.
like, I knew all our customers basically in those days.
And had sort of contact with almost everybody.
And so, I was just close to them.
Like I was taught, I was taught, I was in contact with them quite a bit.
And friends of mine would like, you know, be working at some company and they would
message me like, Hey, just so you know, like I want to try to Tuple, but I don't
have a car, I don't have a credit card.
Or like, this is a deal breaker.
Like, Hey, I tried it.
And I paid for it.
Yeah, a friend of mine just like said, Hey, by the way, that's right, that
came from like, he was a Twitter DM, Hey, I paid a hundred dollars out of
pocket because I wanted to try it so bad.
But just so you know, this is probably hurting your adoption.
Michele Hansen: Interesting.
So when you shifted between those sort of acquisition models.
Did you head to head test them against each other or did you go okay from one
day to the next you, you changed the most.
Ben Orenstein: We just swapped.
Yeah.
I think there's value in AB testing stuff, but I'm not sure we had the volume to
like, do like a statistically significant test or really the willingness to like the
interest, we were sort of like, this, this model has worked for us for a little bit.
But like, this just seems like a better fit and that might've been foolish in
retrospect, there are times I think about going back to that thing, that
model, because, yeah, we got fewer trials, but the conversion rate was so
high and the engagement was really high and it was like, people felt bought
in, in a way that signing for free trial does not make you feel bought in.
And so there's a big benefits and to have like a very open and permissive
trials, and there are downsides too.
And so I, I would be interested almost in an AB test between no credit
card required long free trial versus like, yeah, no, you have to pay us
a hundred dollars to even, try this thing, like go back to that and just
see like what does that look like these days as we have more reputation.
Michele Hansen: Yeah, that would be really, really interesting.
Mean, so you mentioned that the strength of the Tuple brand and I think something
else that's probably going on that I'm curious about your thoughts on is, you
know, you have people who have been using Tuple at their jobs for maybe
like, you know, years at this point.
Um, So when did you guys launch?
Ben Orenstein: Um, Launched, we will be four years old next month,
but our first eight months were a little more than three years ago.
Michele Hansen: Is that it
Ben Orenstein: Yeah.
Michele Hansen: dude?
I feel like you like your legends of the indie, like software world, like
quite frankly have probably, you know, after base camp, like resigned their
position as the leaders of the movement.
I feel like it's almost you guys who are leading it and
you're only like four years old.
What is this like,
Ben Orenstein: Uh, Yeah, well, yeah, there was this, there was this event
where a lot of people started working remotely at that happened a couple of
Michele Hansen: Oh, yeah.
That thing.
Yeah.
I feel like I vaguely heard about that.
Ben Orenstein: So you could, you could argue we've had some tailwinds.
Michele Hansen: So, okay.
I was going to ask something else, but I want to go in on that for a second.
So you started out with us, you had this pay us an upfront for a year.
Period, which was your first eight months.
And then you shifted to pay us a hundred bucks for a month.
So then it, so if your first eight months, if we're kind of making a
timeline here was pay us for a year.
Then you went to a hundred dollars for a one month unlimited trial.
How long did that period last.
Ben Orenstein: uh, Six months, Maybe,
Michele Hansen: Okay.
So now we're, we're 14 months in and then you switched to
free trial credit card required.
How long did that last?
Ben Orenstein: A long time a years?
Michele Hansen: So did that shift around like 20 20 period?
Ben Orenstein: Uh, No, actually it was, I mean, it was this, it was this year.
I think it was
a few months ago or last and last year.
Yeah.
Michele Hansen: Oh, oh, okay.
So super recent.
Ben Orenstein: That the one where we shifted note to no credit card was,
yeah, was six, less than six months ago.
Michele Hansen: Oh, interesting.
Interesting.
But, so I wonder if you, if you've had this, like, All of this growth over
the past couple of, I S I'm still like in shock that it's only four years old.
That's just, that's just not true.
Like, I'm sorry.
I reject that.
Um, You have people who are moving from one job.
To another, who probably used Tuple at their previous job.
And then I feel like we've All had that experience of going to a new job and
they're not using some like modern, you know, tool that you're used to using.
And you're like, oh my God, you guys are in the dark ages.
You aren't using like this thing.
I can't do my work without it.
You have to try it and then like selling it within the organization
when they get like, do you like have, have you heard anecdotes about that?
Ben Orenstein: All the time.
Yeah.
That happens a lot.
Which is great.
One nice thing about selling to developers is they are passionate
about tools and also passionate about sharing them and like arguing for them.
So yeah, we get, people emailing us, like probably every week maybe
saying like, oh, I used Tuple at this place and now I'm here and
I'm trying to get them to adopt it.
I'm trying to get us to buy some licenses and.
Michele Hansen: That's awesome.
And the other thing running under current of that too, is it's not
just that they are passionate about it, but then company's value their
developers more than other employees for better or for worse, like making
the developers efficient is like you, you can't really find any executive
or VP that would argue against that.
Right?
Like it's, it's sort of like, you know, straight in the heart, right.
Because, oh, well this will make the developers more efficient
and they're like, sign me up.
Um, and so you've kind of got these two current's really going for you or
has probably as Justin Jackson would say wave of you know, of things in
your favor that lead to adoption of it.
Ben Orenstein: Yeah, for sure.
And if you take that and then add on like a viral component where people
invite each other to it and inviting people makes the monthly price go up,
it's a, it's a very good business model.
Michele Hansen: Yeah.
Ben Orenstein: Has a lot of things going for it.
Michele Hansen: That sounds pretty sweet.
So I think we've only hit the first points on your list.
Let's keep going.
What do you got next?
Ben Orenstein: Yeah.
So I think a big shift that happened as I got more experienced with enterprise sales
was realizing how much I could say no to.
Michele Hansen: Ooh, I love this, especially when you have some.
Ben Orenstein: Yeah.
And so there's this sort of natural tendency, which is like,
oh my gosh, I want them to buy it.
I need to agree to everything.
And what it turns out is like procurement and legal and everyone
will sort of make, will make requests of you that are not deal breakers.
And so it's natural to assume that everything is a deal breaker.
And if you don't do every single thing they ask of you, it's not going to happen.
And in reality, it's more like it's probably like 30%
of them are deal breakers.
You could probably more often than not reject the request
and still get the deal done.
And so the first one lesson is lose some deals or like get
some deals to close, to, to loss.
So like, one trick that I would do is, people be like, oh, Hey, can
you fill out the security audit?
And I was just classic one.
Right.
And I would say, sorry, no, I do have this detailed page.
That has um, lots of information about our security practices.
If you have any questions that aren't answered here, feel free to
follow up and I'll update the page.
And that like got rid of like 60, 70% of requests for like custom security audits.
Most of the time they would go, oh yeah, yeah.
People would say, oh yeah.
Okay.
I think that'll work.
Hold on.
And like someone would sign off on it and it'll be okay.
When a big company buys a piece of software, there's this giant,
that they have created over the years, so they don't get burned.
So they like us and like that their legal department makes them do that.
Procurement makes them do their, all these items on this thing, like security
audits terms of service, custom red lines in things, payment terms, background
checks for employees, pilots demos.
There's this giant check.
Most of them are not critical.
I would say a lot of them are not critical.
And so if you just do everything to ask you, it'll, it's, the smoothest
version is the easiest way to get them to just, like, get through the process,
but it's kind of hell on your side.
And like, none of this stuff is as good or as useful as working on
your product and actually making it better or talking to more customers.
And so, I would recommend people say, like, say no to things and
then ask, is that a deal breaker?
' cause, you could just ask like that, like, oh, can we get a
volume discount on the whatever?
And I'm like, oh, sorry.
Like, We don't offer discounts until this many seats.
Let me know if that's a deal breaker.
You're just sort of, you're throwing it at them and say like, Hey, let me like,
tell me if this is going to sink the deal.
And if it's not going to sync the deal, no, you can't have it.
It lets you gather Intel and over time you'll sort of learn what things tend to
be deal-breakers and what things don't.
Michele Hansen: So let's demystify this a little bit especially for founders
who don't have a ton of experience with sales or big enterprises with
giant checklists, you said about.
30% of those things are actually required and you can push back on 70% of them.
What are those examples of things that you push back on?
Ben Orenstein: I actually made a list of things I've said no to,
and still gotten a deal done.
Michele Hansen: This is going to be good.
Ben Orenstein: Yeah, this discounts.
Procurement is basically always going to ask you for a discount.
Why not?
Michele Hansen: So this is, I'm just going to pause you on this list.
So I heard and I think, I don't know if this is from Patrick McKenzie or somebody
else the, basically when you're dealing with like giant company procurement
people, they are basically incentivized to get like something like five to a 10%
discount on every deal, every renewal.
And, that can A be a point of um, negotiation where you get extra stuff in
exchange for that, or if you are already, for example, discounting your annual plan,
simply updating the invoice to make it clear that there is a discount in it, and
then you don't have to discount further.
So it looks like they are hitting their metrics on the.
Ben Orenstein: Totally.
Yeah, you can make this easier on yourself by inflating the base price and
then giving them a fake discount down to whatever actually you want to sell
it for, and this is kind of like the game that everyone, that a lot of people
play, Um, but you don't have to play it.
You could just be like, the price is the price and we don't do discounts, sorry.
Or you could say like, we offer discounts for purchases above this.
That's it.
And it's hard to say, like, if that's one of those things, it's hard to
say no to, because like you have this vague sense of like, if I don't
give this person what they want, they're not going to pay me $50,000.
And I can tell you from experience a lot of the times they still are.
They, they haven't, there's no cost to them to ask, they will, they
will almost always ask because it's, it's just pure upside for them.
But this gets to another one of my points, procurement wants to get the deal.
Procurement has been asked by engineering to buy something.
Engineering has more social capital in the company than procurement
does, unless you are dealing with a very dysfunctional organization.
So your average, bottom of the org chart, you know, procurement
specialist is not going to want to go to the VP of engineering and say, I
didn't buy that tool you asked for it because they wouldn't give me a 10%.
Michele Hansen: Right.
That's not going to happen.
Ben Orenstein: Right.
And so if they say, can I have a 10% discount?
And you say, no, they're not going to walk away from the deal almost ever.
Michele Hansen: And especially if it's a product that they have been using for two,
three years now, that is well integrated into the engineering pipeline or
Ben Orenstein: Oh yeah,
Michele Hansen: Like they're going to ask, cause they're incentivized to
Ben Orenstein: yeah,
yeah,
Michele Hansen: but it's not going to tank the renewal or the.
Ben Orenstein: I mean, most of the time, if it turns out your product is not
as useful as they thought it was going to be, and engineering has said, yeah,
we'd like it, but it's not critical.
Well, now you might need to discount.
It depends a lot on what the actual situation is, right?
Like if, oh, we use it occasionally, we like it versus I don't, we get this done.
We want this, this is, you know, please renew this, you know,
signs, Marriott, VP of engineering.
Like there's a difference depending on what the context is for sure.
But.
If you're not, if you're not occasionally sinking a deal or nearly
sinking a deal, you don't actually know where the boundaries are.
Like you're not going to learn.
What's critical.
And like what actually are deal breakers and what are
things they're just asking for?
Because they might as well.
Michele Hansen: I mean, this is the equivalent of, you know, being in a
sort of traditional marketplace and you are, you know, this, I mean, this is
effectively like bargaining at this point.
And then you just walk.
Ben Orenstein: Yeah.
And it's just like, as, as someone new to sales, you will tend to, this advice is
like targeted towards people that kind of becoming, like getting into this, like,
you know, probably engineers who are sort of forced reluctantly into sales.
And I will say that you are, you're used to a world where if someone asks you to
do a thing, you should probably do this.
And sales is just like, everything is negotiable.
Your default mental like map is probably kind of wrong.
And so I would encourage you to correct in a slightly different direction.
So here's some more of the things I've said no to where the deals still got
done discounts, active user pricing, like only charged me for like the
number of users I'm using, filling out a custom security audit, doing background
checks on our employees, a free pilot uh, product changes, a custom demo,
scheduling a call at all, like talking to something, or selling through a reseller.
Michele Hansen: Interesting.
I'm curious, what are things that you have said no to that were a deal?
Ben Orenstein: Procurement generally wants to get the deal done.
So sometimes it's price.
Sometimes you ask for a thing and you say no, and they say,
we can't, do it at this price.
So occasionally price becomes the deal breaker, but it's actually, while
procurement wants to get the deal done, legal doesn't care as much, legal
has a weird place in the thing where it's like because legal is protecting
the legal interests of the company, they have a bit more social capital.
Um, Are more able to sink a deal and are less concerned with
pissing off the VP of engineering.
And so if legal says, you have to have this claim, this line in here
that says you're like absolving us of liability in this situation.
Uh, That can be a deal breaker.
Like if you don't, agree to the legal red lines, and this also is a negotiation,
like there's some things it's, the same thing where some are going to
be deal breakers and some are not.
But I would say you're more likely to bump into stuff where they'll just go.
Yes.
All right.
This is required for us because we don't sign any contracts
that don't have this clause.
Um, you're, You're going to bump it with them in the negotiation of the contract.
Michele Hansen: Yeah.
And speaking of negotiation, I'm reminded of something that I often think of,
which is that you end up in cases, especially in, I guess, organizations
with not tons of process, but there's, there's still procurement and legal
and everything involved where people just want to have an edit on something.
Like they feel like they're supposed to negotiate.
They feel like they're supposed to bargain in some way.
Um, It reminds me of, you know uh, a designer, friend of mine.
And There's a word of that she talked about how, when she would send designs
to a client, she would intentionally put something, you know, in a button
in like bright orange, just so the client had something to correct.
And I feel like very often you mentioned invoicing.
I feel like invoicing terms is that one, like if I get a contract back
that only has one edit, chances are it's changing invoicing terms from
30 days to 45 days, or like, there's just like these like small things that
people will always want to talk about.
But then as we kind of mentioned before, like the role of leverage
in this and how you can play these, these things off of one another as
Ben Orenstein: So that thing of including some sort of request or item that
you know is going to get rejected is something you can do in contracts as well.
So whenever possible, if you can, I recommend starting with your own
agreement, like that's one question that will come up as like who's paper,
are we gonna use, like, are you gonna start from your agreement and we'll read
liner or the other way around, you don't have a legal team, most likely, so I
recommend asking to start with yours and have it sent over to their legal team.
You can use Y Combinator, SaaS agreement, it's quite good.
Michele Hansen: So good.
We, we use that for years before we actually got our, got our own.
Ben Orenstein: Yep.
So yeah, I would start from that and then just edit it for your needs.
But then I would add a bunch of really, really friendly clauses to you, so like
you agree to that we can do a case study and we can mention your name publicly
and we can put your logo on the website and you'll do an interview with us.
Uh, You agree that every year your price is going to go up automatically by 10%,
that your payment terms are 15 days.
You can start with this stuff that no one is going to accept knowing
they're going to redline it and you give them that thing that like, oh,
they've done their due diligence.
They reviewed the contract.
You can put these things in there that are like long shots.
That you're expecting them to reject.
And it gives them that sense of like, okay, I I've done good lawyerly things.
I've protected the company's interests by spotting these things and removing them.
And then some of them will get through, sometimes I put clauses in
there that are like at their level.
They, they agree to it.
I'm like, oh, wow, nice.
Okay.
That's that's great for us.
Michele Hansen: So I agree on that, that logo and you know, mentioned in
case study is a, is a really common one that is sort of a awesome if
it gets through, but, oh, well, if not, you mentioned invoicing terms.
You know, there was like three of them there.
And I'm curious, are there any more in there that you would suggest people
adding on to either their contract or probably a good point to note if you're
not doing contracts with people at the very least having a terms of service
that they are checking off, that they agree to, but more often, like an
actual contract, especially for bigger.
I have one.
Um, And using you using that Y Combinator agreement.
So like, what are those other things that you throw in?
Ben Orenstein: Um, I think I've touched on the main ones.
I usually start, I think another big one is the limitation of liability.
This is like, I think that gets fought over quite a bit, and legal departments
are very much on the lookout for is, who is liable when, and for what.
And who is going, like give each other protection and defend each
other from, various things.
And so the Y Combinator agreement has, I believe a very startup friendly take on
this, which will almost, almost always get edited down or rejected by the other side.
And, so I think that's a good one to leave in there as just like a red
herring almost, or just, you know, give, the legal team something to do.
Um, But yeah, the other one's like mostly around publicity and
marketing and mentioning their name.
And then like an escalator clause, like, Hey, this price like this agreement auto
renews, unless you give us 90 days notice.
And when it does the price automatically increases by this amount is
another good one to throw in there.
Michele Hansen: Have you played those clauses against each other.
For example, someone is asking for, let's say, they're asking for a discount or
they are asking for, let's say better.
You know, they, they don't want to do 30 day payments.
They want to do 60 day payment terms and then you play that
off of, okay, we'll do that.
If we can use your logo on it.
Ben Orenstein: oh, sure.
Yeah, yeah, totally.
Yeah.
You can try.
I, that does not worked that well for me though, honestly.
A lot of the times.
You're dealing with legal when you're negotiating the contract, but like
determining who can use the company's logo is like a marketing thing or like
a PR or comms thing, and so sometimes they're like, yeah, we can't offer this,
you'll have to negotiate this separately with our PR department or something.
And so I haven't had a ton of success being like, we'll give you this, if
you give us this sort of thing, I think there's just like the slight.
Human tendency of being like, well, they asked for 10 things.
If we said no to all 10 were kind of jerks.
So like what's a couple that we can let slide.
Michele Hansen: Yeah, I think so.
So that, that element of like social capital and like who has the
capital in the company and legal, it might be stronger than the
communications team, for example.
Ben Orenstein: True.
Yeah.
And again, it also comes down to like, how badly does the company
want to get the deal done?
And How badly do you want that thing?
Are you going to walk, if they won't let you use their logo?
Because if you're going to walk, if, if they won't and they really
want the software, I bet you can get the logo, but if they kind of
want the software and you're not going to walk, it's a lot harder.
Michele Hansen: So the thing I'm curious about your experience with it,
that I've experienced is insurance.
This often feels like something in contracts that feels pretty set in stone,
that it says, you know, it's pretty common for there to be like, you know, five
different kinds of insurance required.
It says you need to have, you know, general liability.
You might need to have umbrella, you know, umbrella liability, excess coverage.
You might need to have employers comp, you know, workers' comp like automotive
like or um, I mean, especially, you know, in software having cyber uh, errors and
omissions and, you know, a cyber policy on that and something that I have felt,
I guess I used to feel afraid about in the past was upping your insurance
coverage can be really expensive and like, and it looks very like, this
is what it is in the contract, right.
When you get, or those edits back from them.
But you can just reply and say like our policy is, you know, 1
million, 2 million, 3 million.
We don't carry this insurance.
We don't carry automotive insurance because we don't have any corporate
vehicles , and more often than not, I have found that to be acceptable, like, or I
say something to the effect of, you know, if X limit on this is a hard requirement.
We are happy to discuss that with our insurance company, and add the
cost of that additional insurance.
onto this contract.
Ben Orenstein: Yeah.
Michele Hansen: And then pretty much then they're like, oh no, no,
Ben Orenstein: Yeah.
Yeah.
I've also experienced them sort of folding on insurance requirements.
It's kind of like a wishlist more than hard.
Do they really care if it's 5 million versus 4 million?
And I probably not, not really.
Although I will say it's a very easy requirement to hit.
We use founder shield and we just like tell them what we want and they
send us like a group, like I got a collective policy kind of thing.
It was not very much work and it was not actually very expensive
for the limits that we needed.
And so this was kind of like a one day ish task to like get a bunch
of insurance that let us say yes, we have this on, on contracts.
Michele Hansen: Uh, agreed.
We actually use founder's summit ourselves as well.
Ben Orenstein: that founder shield.
Yep.
Yeah, they're good.
Michele Hansen: all the things named founder.
So what else is on this list?
Ben Orenstein: I mean a million things I'm going to give.
I'm going to give some, some terrible legal advice here.
Michele Hansen: this is, not legal advice.
Ben Orenstein: this is not legal advice.
This
Michele Hansen: Consult your lawyer.
Ben Orenstein: This is advice.
that I think is probably pretty good, 99% of the time.
And then 1% of the time will be catastrophic for you.
And so just, just heads up, which is a contract that you signed with another
company is enforceable in court.
You have to imagine, like, will we get sued if if this thing is going to
be enforced by a judge in a courtroom with lawyers involved that are
making thousands of dollars per hour.
And so sometimes you look over a list of things in a contract and you go, is
it likely that if we slipped on this thing or like had a million dollars
less coverage on this thing that we are going to get dragged into, and sued for
breach of contract and you should ask.
And the answer is probably not most of the time.
Um, So I think this is my like cavalier startup attitude, which is like, if
you're trying to get a business off the ground and like, I wouldn't worry it,
like, the reason you die is because you.
Uh, Miss a term in their terms of service and did not technically comply with it.
And then they found out and took you to court and sued you and
broke your company that way.
I think the number of startups that have died that way, probably very, very small.
And so 99% of the time I wouldn't worry about it quite as much.
Like, every single beautiful line in the contract.
This is not how we do it now.
Now we're like a legit company.
We have a legit lawyer.
We like do all the right things.
We push back where we need to, we follow all these.
But if you're like a brand, if you're a two person company trying
to sell this tool to an enterprise and they're like, you, you need to
do this really weird esoteric thing.
You need to conduct a uh, training every so often on making sure that
your supply chain is not using forced human labor and you go sure.
Yeah, we'll do that.
And then, like you have a two minute conversation with your co-founder
on a calendar invite and say yes, checked, compliance, done.
That might be okay.
Michele Hansen: I think it's also too important to note that like, if there
is a conflict about something in the contract, like everybody wants to avoid
court because as you said, it's extremely expensive to the point where like a lot of
big enterprise contracts like that, they said, it has to go into arbitration, like.
You start with negotiating, which is talking about the problem and
finding a solution to it there.
And then if you can't do it, then you go into arbitration, which is, you
know, you have or mediation rather.
And then only after you have failed negotiation, you have failed mediation,
then do you go into the legal system?
Right?
And so like, if there was some massive problem, like it is unlikely.
That, you know, sort of knock on wood, right?
That it ends up in court and hopefully you have built a relationship
with them and they trust that you are a well-intentioned person who
may be just screwed something up.
And there is some other way to solve this rather than a courtroom.
Ben Orenstein: Yeah, exactly.
And that this advice is like coming from someone that has not been sued.
So
Michele Hansen: Yes, I guess I
Ben Orenstein: I imagine some, some number of years I will look back
on this conversation and go, wow,
Michele Hansen: We did get a cease and desist list at once.
That was.
probably the closest we ever for a side project yet a mobile app
Ben Orenstein: So, anyway, I guess my, I guess my, you probably won't get sued
is my uh, my high-level advice and do with that information of what you will,
Michele Hansen: cool.
What's next?
Ben Orenstein: um, Let's talk about pricing.
I learned a weird thing when I started doing these deals, which
is that a hundred thousand dollars a year is not a lot of money.
Michele Hansen: Can you break that down?
Ben Orenstein: Yes.
So as a person, a hundred thousand dollars a year is a lot of money.
Like you're uh, an individual, you have a job, you make a
hundred thousand dollars a year.
You make a lot of money.
You're doing great.
If I was like, Hey, you need to pay me an extra a hundred
thousand dollars this year.
You say what?
Absolutely.
There's no way I can pay you a hundred extra $200,000 this year, a hundred grand
a year as a person is a lot of money.
A hundred thousand dollars a year to a company of a decent
size, not a lot of money.
So like, it is very reasonable to give an invoice to a company that
says I would like you to pay me a hundred thousand dollars a year and
have them not even blink because it is less than their lunch budget.
You Have to really shift your mentality around money and dollars and value when
you start dealing with organizations that are bigger than 20 people, let's say.
Michele Hansen: You mentioned a lot of this advice in the beginning is
stuff that will break somebody's brain, especially if they come into
this with an engineering mindset where everything makes sense and is logical.
And this is absolutely not logical on the surface, but then it actually is.
When you think about all of the work that you not only put into serving
these customers, but also this all of this gymnastics that goes into
actually delivering the product to them and all of these other pieces of.
Ben Orenstein: I would almost phrase it differently, actually, which is
that a hundred thousand dollars a year is just, is something that if a
company has a hundred engineers paying a hundred grand a year is something
that they would do to solve a problem with like medium below annoyance.
They are like a hundred percent company is solving.
It is throwing much, much, much more money than that at thing like not huge
problems, not even the most critical problems of the business or the most
important expenses in the business.
I think it's, it's kind of like useful to think about salaries.
For example, just to kind of give you a data point.
If there's a hundred engineers in the company, that company is
paying $20 million a year in.
Probably more like $20 million a year.
You could be 0.005 of that and charge a hundred grand a year.
And it's like, it's just, it's just not a big deal.
Like They're the numbers they're looking at, and the numbers are used
to dealing with, especially because now they have a procurement department, a
hundred grand a year standard standard software cost, a hundred grand a year.
Absolutely.
All day long.
Michele Hansen: And, you know, the thing to think about with that is that they
have that $20 million investment in their engineers, and you know, speaking of
like to Tuple, for example, to spend a hundred thousand dollars to a much higher
return on that $20 million investment.
It might be a very small percent of that total cost, but even if they get
a 1% or a 5% efficiency improvement, or they save those developers X number
of hours per week, which is more of the category that Geocodio falls in,
like that is incredibly valuable.
Ben Orenstein: Yeah, totally.
And I wish they would think about that.
Exactly like you placed it, like you said, it like a hundred grand a year is
half a percent on a $20 million payroll.
And so it would be great if I could just say tubal makes you 0.6% of a
percent uh, more efficient and therefore you should clearly pay me a hundred
grand a year and they would go, yes, that makes perfect logical sense.
I agree.
It doesn't quite work that way.
It'd be nice if that argument like resonated better.
But in the, in the bigger scheme that, that does work out.
Yes, exactly.
If you, if you're making them more efficient the ROI can be,
can be there for big numbers.
Michele Hansen: Yeah, absolutely.
What's next on the.
Ben Orenstein: Um, Do annual pricing with quarterly truths.
So charge a big amount per year and every quarter, like so, well, first of all, have
pricing that gets, goes up as the company gets more value as they use your product.
Uh, expansion revenue is the best kind of revenue.
So if your pricing model does not allow your most successful
customers to continually be paying you more money, you're pricing.
And so what we do is we do, we'll say, like, they'll say we want, we want to
buy a hundred seats and we'll go great.
Here's the cost for a hundred seats, by the way, if you use more, no problem.
We don't need to do a whole negotiation.
We're going to put this on the order form.
We're going to put this in the agreements.
Once a quarter, if you go over it, we'll charge you a prorated amount for
the additional seats that you started using so that we don't need to do like
a whole, we're not just gonna like float those seats for an entire year
and then catch up a year from now.
And we don't need to do a whole new agreement negotiation.
We're just going to send you an invoice for those, prorated amounts.
Michele Hansen: Interesting.
I think it's always interesting for you to, like, we don't do per seat pricing.
Um, But we do do like volume-based pricing for example, which is sort
of a, like, I feel like per seat pricing is the most, most typical form
of expansion revenue and, you know, they're getting more value out of it.
So you, they pay you more.
There's also, you know, volume based, which is where we are.
And I'm trying to think of if there's any other sort of way of
having like expansion built in.
Ben Orenstein: So the high-level term for this is value metric.
Um, And I think your pricing needs a value metric of some kinds, which I think the
the way to figure it out, it's just like if the customer started getting 10 times
as much value from the software, what would they be doing more of or using more
of, or seeing more of that you can charge.
So, is it, is it compute time?
Is it requests?
Is it users?
Is it, you know, tasks they can have in the system?
Um, figuring out the answer to that question is pretty critical.
For Tuples growth, a lot of the times our expansion growth in a
given month will be like two or three times what our new MRR is.
So the business is growing like three or four times faster because
we have a good expansion, right.
Michele Hansen: Wow.
Ben Orenstein: Yeah.
Michele Hansen: I think the thing I love about that too, is that you are.
Your incentives are aligned with your customer, right?
Because the more value they are getting out of it, the more you are charging them.
And, you know, there are some products like gyms are the classic example of
this, that they expand their revenue by their customers, not using their product.
And It creates this conflict of incentives between the company and the customers um,
but something like expansion, revenue, you know, charging for more seats that
aligns you with your customers and encourages you to keep serving them well
and have a good relationship with them.
And also for them to keep using it because they're getting more and more valuable.
Ben Orenstein: It also has to make intuitive sense to the customer.
Like I use bare metrics and their pricing has always kind of irked me a
little bit where bare metrics charges you, bare metrics has an analytics
tool for like diving into your financial data like your subscription
metrics, like churn and average customer value and things like that.
And bare metrics, charges you a base amount and then increases as
you make more money as your MRR goes up, as your revenue goes up.
And that has always felt weird to me because it was like bare metrics
doesn't make my revenue go up.
It tells me stuff about my revenue, but it doesn't actually
increase the thing I care about.
So like, it has to, it has to kind of work, whereas if your
team is using Tupelo, and you add three more engineers to it, it's
because you like it, you like it.
And you want them to use it too.
And then they like it.
So it sort of makes sense, it tracks you're like, yeah,
we're using the tool more.
We're getting more value from it, we should pay more.
Whereas just being like, oh, you're making more money than last year.
We're going to charge you more money now.
I was like, well, but you didn't, you're not, that's not your value.
That's just like a value that you decided on.
Michele Hansen: I think it's bare metrics, I, and they are
redoing their pricing right now.
I've seen a couple of friends post a rather long email they got from bare
metrics on their pricing changes.
That does not say what the pricing changes are, but I'm curious.
I bet they have a sense that their pricing was not aligned.
Ben Orenstein: I think they're struggling with some pricing stuff right now.
And I think that email was a big swing and a miss.
Michele Hansen: Yeah.
Okay.
So we've got about five minutes left.
We usually think that, you know, people listen to software social while they're
out, say running 5k, and they are probably approaching 10 K at this point.
So I apologize to your legs, dear listener, or to your dog
who is tired of walking around the block uh, so many times.
So can you give us a, just like a quick point by point of those
remaining items that were on the
Ben Orenstein: right, I'm going to do them all lightning
Michele Hansen: yes.
Lightning lightning rounds.
Ben Orenstein: All right.
Here's the rest.
Here's the rest of the things, don't agree to a custom contract that
does not have a big price tag on it.
Make sure you negotiate that upfront before you dive into the terms
and figure out what you agree on.
Put your price on your website.
It's good to have an anchor there, starts at 20,000 a year.
So you don't people wasting your, charge more for single sign on, even though
it annoys people, put that in your enterprise to your charge a lot for it.
Um, put an expiration date on your quotes, so that procurement feels
a bit of pressure to get them done.
Um, offer quarterly payments instead of discounts.
If people ask for a big discount, say, oh, we can't do that,
but you can pay in pieces.
If that helps.
If you do offer a discount, ask for something in return, try that, do that
negotiation that we talked about, like, Hey, can we feature you in or whatever?
Um, Keep in mind a hundred engineering org pays $20 million a year in software or in.
Um, It can be useful when you're dealing with procurement to say, you don't know
what you're doing and ask for advice.
I had a procurement person from Shopify basically walk me through how they
buy stuff and he was very helpful and it helped us get that deal done.
Ask the deal get done faster often there's shortcuts or price points
that get the deal done easily.
For example some places require a C-level sign-off for price points above
X, make sure you know what that is.
Ask about it and try to come in under that.
If you don't get a hard, no, you don't know where the limits are.
Uh, It's often useful to tell somebody you're a tiny startup when you get our
security or an it request saying like, Hey, can you fill out this a hundred
page security audit, say, no, sorry.
We're just three people, blah, blah, blah.
Don't get a SOC two upfront.
Not worth it.
You can get tons of deals done.
Even with giant companies without it, we have um, create a reusable
security document rather than filling up a spoke questionnaires.
Um, You can often agree to implement things later in a contract.
So they say, we need X.
You say, we can do this.
We can agree to get X done within the next 12 months.
And they say, okay legal cares less about getting the deal done.
Use the white commenters SAS agreement.
You probably won't get sued.
I'm always included an escalator clause that increases the price and auto renews.
When you eventually try to hire a sales person to realize that most of them are
charming, hardworking, and not that smart look around for a smart one instead.
Michele Hansen: There's so much good advice in there.
Um, So what are the things I wish we could dive in on a what a tremendous gifts to
spell all of that out, I feel a little bit obligated to give you some advice
at this point and say, Ben, when are we getting the sales for founders review
newsletter, where you start writing the rough draft of your sales for founders.
Ben Orenstein: Hmm, that's a good question.
So actually it was inspired of the day because Nathan Barry shared that
he has a paid email sequence, like a paid email course that he sells.
And I think that's an awesome format where like, he can sort of like when
he feels like, if he adds another email to the sequence and you're basically
buying it, like for like a hundred bucks, you get like what, however many
emails are currently in the sequence.
And then at any additional ones.
And I was thinking, this might be a good topic for this, where it's like, anytime
I'm feeling inspired, I'll pull one of these points off, flesh it out into
an email, add it to the sequence of my people who are in this position of needing
this information, get access to it.
Michele Hansen: That sounds awesome.
Hope to see that out there sometime soon.
Ben Orenstein: Well, thanks Until then you can follow me on Twitter.
and I'll eventually talk about it there.
If I do it.
Michele Hansen: um, Awesome.
Well, thank you.
so much for stopping by Ben.
Such a pleasure to talk to you, and I hope that we will get more writing
from you on sales for founders.
Ben Orenstein: thank you.
Appreciate that.
Happy to come by.
Michele Hansen: And that will wrap up this week's episode
of software, social, Colleen.
We'll be back with me next week.
Make sure to check out this week, sponsor a cloud forecast to manage
your AWS bill@cloudforecast.io.