Category Archives: Management

What Exactly Do You Mean by Anal? Thoughts on Leadership and Self-Awareness

I remember one time having an argument that went like this:

Dave:  I don’t think you’ve thought through the details on this one.

Joe:  I think there’s enough detail in there.

Dave:  No, there’s not.  There’s no underpinnings, there’s no rigor in the thought process.  Remember, David Ogilvy always said “good writing is slavery” and ergo you need to dive deep and —

Joe:  Oh, you can be so anal.

Dave:  I don’t think I’m being anal.  I’m just being rigorous.

Joe:  Yes, you are.

Dave:  Well, what exactly do you mean by anal?

I always try to listen to myself talk and once in a while I have a did-I-just-say-that moment.  Did I just say, “what exactly do you mean by anal?”  Oh shit, I did.  Isn’t that kind of the definition of being anal.  Oh shit, it is.  Heck Dave, you may as well just have replied:  what I really want to know is — is there a hyphen in anal-retentive?

The actual issue here is one of leadership:  being aware of your strengths and weaknesses, trying to avoid over-doing your strengths and working to compensate for your weaknesses.  It’s critical that all leaders focus on this because, by default, most folks will over-play to their strengths (to a fault, effectively turning them into weaknesses) and ignore their weaknesses.

It’s not hard to be self-aware when it comes to most strengths and weaknesses.  Most folks know, for example, if they’re great at public speaking and bad at financial analysis, or great at individual problem-solving but bad in groups.  Or high on IQ but low on EQ.  People usually know.

Sometimes we euphemize with ourselves.  For example, while others might say I’m:

  • Detail-oriented, I prefer “rigorous”
  • Blunt, I prefer “direct”
  • Contrarian, I prefer “critical-thinking”
  • And so on

But at least you’re circling the same pond.  You have awareness of the area –though you might soften how you think about it to protect the old ego, relative to how others might more bluntly, or should I say directly, describe it.

But some weaknesses are harder to self-assess.  For example, I’ve taken assessments that basically prove I’m low on flexibility.  But I never knew it.  In fact, I thought I was supremely flexible because I was capable of moving.  Think:  OK, we’ll move a bit in your direction.  You see, I’m flexible!  Voila, QED.  Bravo Chef!  I was, however, blind to the fact that one person’s mile is another’s inch.  When you’re inflexible you risk self-congratulation for a tidbit of demonstrated movement when the other party thinks you haven’t moved at all.

As another example, because communication is one of my strengths, I always thought I did better in groups, when in fact I do better with people one-to-one — which was a key strength of which I wasn’t even aware.  Some of these things are just hard to see.

My advice on this front is three-fold:

  • Be aware of your strengths and beware your natural tendency to overplay to them.  If one of your strengths has become a running joke (e.g., at one point one of my staff handed out “Captain Anal” pins), it could be time to think about it.
  • Be aware of your weaknesses and, while you can work on them if you want, use building a complementary team as your primary way to compensate.
  • Attend programs like LDP (managers, directors) or LAP (C-levels) to build a deep understanding of both.  These programs aren’t cheap, but they will give you self-awareness, in a kind of data-driven and ergo virtually undeniable way, that few other programs will.

(And can somebody please spell-check this thing to make sure there aren’t any errors.)

Foreword to The Next CMO: A Guide to Marketing Operational Excellence

The folks at Plannuh, specifically Peter Mahoney, Scott Todaro, and Dan Faulkner, asked me to write the foreword for their new book, The Next CMO:  A Guide to Marketing Operational Excellence.  (Free download here.)

Here’s what I wrote for them.

CMO is a hard job. Early in my career I worked for CMOs, in sort of an endless revolving-door progression, at one point having 7 bosses in 5 years. I have been a CMO, for over 12 years at three different companies. I have managed CMOs, working as CEO for over a decade at two different companies. And I have guided CMOs, serving as an independent director on the board of five different companies.  Let’s just say I’ve spent a lot of time in and around the CMO role.

In the past two decades, no executive suite role has changed more and more quickly than the CMO. Marketers of yesteryear could focus on strategic positioning and branding, leaving such banalities as lead generation to sales-aligned field marketing teams, managing scraps of paper in cardboard boxes.

Sales and marketing automation systems changed everything. Concepts like pipeline, conversion rates, and velocity were born. From lead generation sprung lead nurturing. Attribution emerged to solve one of the world’s oldest marketing problems.

Artificial intelligence (AI) arrived at the scene, helping with areas like lead scoring and prioritization. The demand for analytics followed suit. Marketing ops arose as the cousin of sales ops.

Digital marketing changed everything again. Spend became even more accountable. Pay-per-click replaced pay-per-view which replaced just-pay. Targeting became more precise both via search and the rise of social media. Content marketing emerged to supplement declining traditional public relations. If yesterday’s marketing was leaflets dropped from airplanes, today’s is A/B-tested, laser-guided, call-to-action missiles.

Technology came at CMOs faster than they could keep up. Software could power your website, run your resource center, generate your landing pages, test your messaging, drive repeatable SDR processes, identify your ideal customer, drive account-based marketing, and even record and analyze prospect conversations.

What’s more, as CEOs and boards knew that entirely new classes of questions were becoming answerable, they started asking them.

  • What percent of the pipeline are prospects within our ideal customer profile?
  • What’s the stage-weighted expected value of the pipeline?
    Forecast-category weighted?
  • What’s our week 3 pipeline conversion rate for new logo vs upsell opportunities?
  • What’s our cost per opportunity and how does it vary by channel and geography?
  • What’s marketing’s contribution to our customer acquisition cost (CAC) ratio and how are we improving it?

And dozens and dozens more.

The hardest job in the C-suite got harder. Today’s CMOs need to be visionary strategists by day and operational tacticians by night. Operational marketing has become the sine qua non of modern marketing. If the website is optimized, if the demand generation machine is running effectively, if marketing events are executed flawlessly, if quality pipeline is being generated efficiently, if that pipeline is converting in line with industry benchmarks, and if and only if all that is being done within the constraints of the marketing budget — spending neither too little nor too much — then and only then does the CMO get the chance to be “strategic.”

Operational excellence is thus a necessary but not sufficient condition for CMO success. So it’s well worth mastering and this book is the ideal guide to building and managing your own integrated marketing machine.

There’s no one better to write this book than the leadership team at Plannuh, Peter, Scott, and Dan. With their experience running marketing teams from startups through multi-billion dollar public companies, teaching and mentoring generations of marketers, and now building a platform that codifies their thinking into a scalable SaaS platform, this guide is certain to raise the IQ of your marketing function.

– Dave Kellogg

On the Perils of Taking Advice from Successful Business People

One of the hardest things about running a startup is you’re never sure who to listen to.

Your board members own big stakes in the company, but that doesn’t automatically align them with you.  Your late-stage investors want low multiples on big numbers.  Your early-stage investors want big multiples on small numbers.  And they have their own specific needs driven by their funds and their partnerships.  Your rank-and-file employees own relatively small stakes which, ceteris paribus, should make them want you to swing for the fences — but, in these days of decade-to-liquidity, you may have employees so jaded on equity compensation that they’d just like to keep their well-paying jobs.

Your executive team wants to hit their targets, earn their bonuses, and maybe some of them are deeply motivated by winning in the market, but maybe not.  With a 0.5% to 1% share, a $500M exit can mean a $2.5M to $5.0M pop.  Maybe some would prefer to take the early exit, upgrade the house in Menlo Park, and go do it again somewhere else, as opposed to riding it out for the long term.

The idea that giving everyone some equity is a good one, but as I wrote nearly ten years ago, it’s quaint to think that doing so aligns everyone.

So, if you can’t really look inside the company, what then?  Well, if you’re like many, you look outside.  You might read books, subscribe to blogs, or listen to podcasts.  You might seek out advisors or create an advisory board.

In all such cases, you’ll be taking advice from business people who have gone before you, have had anywhere from some to considerable success, and interested in sharing their learnings with others.  You know, people like me [1].

Look, I’m not going to argue that getting advice from successful people is a bad idea — it certainly seems preferable to the alternative — but I am going to point out a few caveats, most of which aren’t obvious in my estimation:

  • Successful people don’t actually know what made them successful.  They know what they did.  They know it worked.  They have hunches and beliefs.  Causality, not so much.  Some of them can be quick to forget that, so you shouldn’t be [2].  There was no control group.  If Marc Benioff carried a rabbit’s foot, would you?
  • Too many successful people are rinse/repeat [3].  I’m frankly surprised by how many successful people are chomping at the bit to do exactly what worked for them at their last company with total disregard for whether it applies to yours.  Beware these folks.  Interview question:  so could you tell me about a situation where you wouldn’t do that?  It’s not foolproof because most will catch the hint, so this is really something you need to listen for before asking.  Do they diagnose-then-prescribe or prescribe without diagnosing?
  • Their situation was likely different from yours.  In fact, in the land of disruption, as Kelly Wright points out in this podcast, it almost certainly was.  Are you creating a new category without competition?  Are you in an over-funded next-big-thing category?  Are you competing against a big company transitioning product lines?  Are you trying to get people to buy something they don’t believe they need or pick among alternatives when they know they do?  Are you disrupting technology, business model, or both?  Are you filling a need that is in the midst of being created the rise of another category?

Should you listen to these people?  I think yes [4].  But try to find ones who have seen both success and failure, seen success in many situations (not just one), and who are thoughtful about a company’s specific situation, and approach the advisory process and their own prior success with humility.

# # #

[1] While I’d characterize my own success as towards the left of that spectrum, I am advising and/or have advised over 20 startups, some of them stunningly successful.

[2] One of my favorite quotes of this ilk is from former Harvard marketing professor, Theodore LevittNothing in business is so remarkable as the conflicting variety of success formulas offered by its numerous practitioners and professors.  And if, in the case of practitioners they’re not exactly “formulas,” they are explanations of “how we did it” implying with firm control over any fleeting tendencies toward modesty that “that’s how you ought to do it.”  Practitioners filled with pride and money turn themselves into prescriptive philosophers, filled mostly with hot air.

[3] By the way, “I made $1B doing it this way” is one of the more difficult arguments you’re probably wise not to take on.

[4] “Duh.”

Marketing Exists to Make Sales Easier

Many moons ago when I was young product marketing manager, I heard a new VP of Marketing speak at a marketing all-hands meeting.  He spoke with a kiwi accent and his name was Chris Greendale.  What he said were six words that changed my career:

Marketing exists to make sales easier

While this has clearly been a theme in Kellblog posts over the years, I realized that I’ve actually never done a dedicated post on it, despite having written reductionist mission statement posts for both professional services (“maximize ARR without losing money”) and human resources (“help managers manage”).

Being a math type, I love deriving things from first principles and this seemed the perfect first principle from which to derive marketing.  First, you hire a team to build your product.  Then, you hire a team to sell it.  The only reason you need marketing is to help the second team do its job better.

At my next job, I remember bumping into Larry, our fresh from the used-car lot VP of Business Development, who in frustration (as he often was), one day came to work with a bunch of t-shirts that looked something like this

Enterprise software is a two-engine plane and those two engines are quota-carrying salesreps (QCRs) who sell the software and storypoint-burning developers (DEVs) who write it [1].

Everyone else is “the help” — including marketing, finance, sales supporting roles (e.g., SCs, SDRs), engineering-supporting roles (e.g., QA, PM, TPM), customer service, and yes, the CEO.  The faster you understand this, in my humble opinion, the better.

And, while we’re in realization mode, the other thing to internalize is that it costs about twice as much to sell an enterprise software product as it does to build it.  Per KeyBanc, typical S&M spend is 45% of revenue and R&D runs about half that.

But back to the mantra, make sales easier.  Why did I like it so much?

First, it put marketing in its proper place.  At the time, there was something of a power struggle between sales and marketing, and CPG/brand management types were trying to argue that product marketing mangers should be the generals and that sales were just the foot-soldiers.  Looking both around me and at the P&L that just seemed wrong.  Maybe it worked in consumer products [2] but this was enterprise software.  Sales had all the budget and all the power to go with it.  We should help them and, ego aside, there’s nothing wrong with being a helper.

In fact, if you define your mission statement as “help” and remember that “help is defined in the mind of the recipient,” you’ve already gone a long way to aligning your sales and marketing.

Second, there was nothing written in stone that limited the scope of that help. Narrow thinking might limit marketing to a servile role.  That’s not my intent.  Help could take many forms, and while the primary form of requested help has evolved over time, help can include both the tactical and the strategic:

  • Giving sales qualified leads to work on.
  • Building training and tools that helps sales sell more.
  • Providing competitive information that helps win more deals.
  • Creating an ideal customer profile (ICP) that helps sales focus on the most winnable deals.
  • Building industry-specific messaging that helps sell in given verticals
  • Working with PM [3] to build product that is inherently more salable [4].
  • Corporate strategy development to put the company in the right markets with the right offerings.

When I say help, I don’t mean lowercase-h tactical help.  I mean help in all its forms, which can and should include the “tough love” form of help:  “I know you think you want that, but let me demonstrate that I’ve heard your request and now explain why I think it’s not a good idea.”

Being helpful doesn’t mean saying yes to everything.  I hearken back to Miracle on 34th Street whenever I’m drawn into this problem (quote adapted):

Kris Kringle:  No, but don’t you see, dear?  Some <salespeople> wish for things they couldn’t possibly use like real locomotives or B-29s.

If sales is asking you for a real locomotive or a B-29 you need to tell them.

For the rest of my marketing career, I took Greendale’s mantra and made it my own.  If sales were my customer and I were helping them, then:

  • We’d run sales satisfaction surveys to see how happy sales was with marketing and where they wanted us to invest and improve [5].
  • We’d make ourselves accountable.  One of the biggest stresses in the sales/marketing relationship was, to paraphrase an old joke, sales felt like the pig while marketing was the chicken.  We’d publish objectives, measure ourselves, and be honest about hits and misses.
  • We’d bring data to the party.  We’d leverage syndicated and custom research to try and made data-driven as opposed to opinion-driven decisions.
  • We’d stop back-seat drivers.  I’d remind anyone that got too uppity that “quotas are available” and they should go take one [6].
  • We wouldn’t be the marketing police, scolding people for using out-of-date materials.  If sales were using a deck we’d decommissioned quarters ago, our first response wouldn’t be “stop!” but “why?”
  • We’d market marketing.  We’d devote some time to internal marketing to let the sales organization know what we were doing and why.

We’d even do something that tested the limits of HR (particularly when I was in France).  I’d use the sales satisfaction survey to rank every customer-facing marketer on a matrix.

This gave me hard data on who sales knew in the department and what they thought of them.  If we’re going to make messaging for sales to present to customers, we’d better prepared to — and be good at — presenting it ourselves [7].

Overall, the mantra served me well, taking me from product marketing director to VP of product marketing to VP of corporate marketing to overall VP of marketing and a great run at Business Objects.  I’ve had plenty of people challenge me on it over the years — usually it’s because they understand it as purely tactical.  But it’s served me well and I encourage you to use it as your North Star in leading your marketing team.

After all, who doesn’t like help?

# # #

Notes

[1] You’d be wise to add those two figures to your one-page key metrics.  Somehow it’s always easier to hire the supporting staff than the “engine” staff, so keep an eye on the raw numbers of QCRs and DEVs and, for more fun, track their density in their respective organizations (QCRs/sales and DEVs/eng).

[2] Shout out to my daughter Stephanie who works in brand management on a consumer product and who can now inform me directly of how things work in that world — and it is different.

[3] PM = product management.

[4] Either in the sense of better solves the problem or in the tactical sense of wipes out competitive differentiation.

[5] One of my favorite results was the sales and SCs often wanted exactly the same thing, but that sales wanted it more (i.e., roughly the same priority curve but sales would rank everything even more important than the SCs).

[6] Most didn’t, but a few did, and some did remarkably well.

[7] We were probably a $100M company around the time we started this, so I’m not suggesting it for a 2-PMM startup.  And yes, I’d put myself on the matrix as well.

On Recruiting: The Must-Have / Nice-to-Have List

I’m amazed by the number of times I see companies performing searches, even for key positions, without a clear idea of what they’re looking for.  Rephrasing Lewis Carroll, “if you don’t know what you’re recruiting for, any candidate looks great.”

lewis

I liken executive recruiters to Realtors.  If you don’t give a Realtor specific guidance on what you want to see, they’ll show you whatever’s on the market.  Moreover, even if you do tell a Realtor that you want a 4-bedroom on a cul de sac with great schools, you are likely to end up visiting a 3-bedroom “charmer” on a main thoroughfare that they just had to show you because it has a certain “je ne sais quoi.”  That know-not-what, by the way, is that it’s for sale.

This is a moment of truth for your relationship with your Realtor because if you do not say “if you show me another house that doesn’t meet my must-have criteria I’ll be working with another Realtor,” then three years hence you’ll be wondering, to the sound of passing traffic, why you live in a 3-bedroom and the kids are in private school.

Let’s stick with the house metaphor.  It’s actually fairly easy to make a list of criteria.  Make a two-column list, with one column titled “Must Have” and the other “Nice to Have.”  (One way things go wrong is when you mix up the two.)

Must Have Nice to Have
4 bedrooms Hot tub
3 baths Ranch (one level)
Quarter-acre lot Half-acre lot
Great schools (K-12) Less than 20 years old
No swimming pool Walk to downtown
$1.0 to $1.5M price

This process has a number of advantages:

  • It forces you and your spouse to discuss what you really want.  What’s truly a must-have vs. a nice-to-have criteria?  You might be surprised.
  • It provides a crystal-clear basis of communication with your Realtor.
  • If you provide the list before engaging with Realtor, they have the chance to refuse the business if they think your criteria are unrealistic, e.g., given your price point.
  • Once engaged, it gives you the basis for holding the Realtor accountable for showing you only what you want to see.

Let’s switch to executive recruiting.  What do we typically find in an executive job specification?  This is excerpted from a real CEO spec:

The ideal candidate will be or have:

  • A track record in building and leading high-performance teams
  • Confidence to interact with and inspire belief from present and future investors
  • The ability to articulate and define relevant methodology
  • An excellent communicator, effective in front of Customers, Employees, Analysts
  • Sound judgment and maturity
  • A leader who recognizes and respects talent outside of his/her own and recruits that talent to work close to and complement him/her within the company
  • Unquestionable integrity
  • Organizational tolerance:  ability to work with fluidity and ambiguity

That ambiguity tolerance starts right with this spec.  Think for a minute:

  • Are these as clear as our house spec?  A track record for how long, two quarters or ten years?
  • Are they measurable in any way?   How do I know if they respect talent outside their own or have sound judgement?
  • Are they well thought out?  (“There, I just questioned your integrity. We’re done.”)
  • Are they specific?  Which relevant methodology should they be able to define?

Compared to our house criteria, this is a mess.  And there are 17 more bullets.

How does this happen?  It’s just a tradition in executive recruiting; these sorts of specs get created. These bullets were probably selectively copied and pasted from other specs by an associate at the search firm.  While the selection was likely based a conversation with the company about what they want, it’s clear that nobody did any hard thinking about what they really needed.

A big clue that they have no must-have criteria is this “ideal candidate” nonsense.  Our house spec didn’t say “the ideal house will have” and then describe some fantasy house we can never afford.  We decided what the house must have, and then added some things that would be nice to have as well.

Let’s make an example of what an must-have / nice-to-have list could look like for an EVP of Sales at $50M startup.  This list makes a lot of assumptions about company needs and is far from perfect.  But it’s a heck of a lot better than the bullets above.

Must Have Nice to Have
Previously led all sales at an enterprise SaaS startup as it grew from $50M to $100M in ARR Knowledge of the CRM space
Has previously established detailed operational metrics and processes to run a velocity sales model Ability to quickly recruit a strong VP of salesops
A network including top reps and regional managers that can be  immediately recruited Prior experience creating and growing a sales enablement  function with onboarding and certification
At least 3 years’ experience managing international sales Prior experience selling or managing outside of North America
At least 5 years’ experience managing a three-level sales organization with at least 50 sellers Early-career experience in a technical or pre-sales role
Demonstrated compatibility with the organization’s culture and values Technical undergraduate degree plus MBA

What’s most important is that the process of making this list — writing it down, talking to peers about it, sharing it with the board, discussing it with prospective search firms — will clarify your own thinking and help you build consensus around precisely who is needed to do the job.

Otherwise, you’ll just get an “athlete” that the recruiter had in inventory.

Should Customer Success Report into the CRO or the CEO?

The CEO.  Thanks for reading.

# # #

I was tempted to stop there because I’ve been writing a lot of long posts lately and because I do believe the answer is that simple.  First let me explain the controversy and then I’ll explain my view on it.

In days of yore, chief revenue officer (CRO) was just a gussied-up title for VP of Sales.  If someone was particularly good, particularly senior, or particularly hard to recruit you might call them CRO.  But the job was always the same:  go sell software.

Back in the pre-subscription era, basically all the revenue — save for a little bit of services and some maintenance that practically renewed itself — came from sales anyway.  Chief revenue officer meant chief sales officer meant VP of Sales.  All basically the same thing.  By the way, as the person responsible for effectively all of the company’s revenue, one heck of a powerful person in the organization.

Then the subscription era came along.  I remember the day at Salesforce when it really hit me.  Frank, the head of Sales, had a $1B number.  But Maria, the head of Customer Success [1], had a $2B number.  There’s a new sheriff in SaaS town, I realized, the person who owns renewals always has a bigger number than the person who runs sales [2], and the bigger you get the larger that difference.

Details of how things worked at Salesforce aside, I realized that the creation of Customer Success — particularly if it owned renewals — represented an opportunity to change the power structure within a software company. It meant Sales could be focused on customer acquisition and that Customer Success could be, definitionally, focused on customer success because it owned renewals.  It presented the opportunity to have an important check and balance in an industry where companies were typically sales-dominated to a fault.  Best of all, the check would be coming not just from a well-meaning person whose mission was to care about customer success, but from someone running a significantly larger amount of revenue than the head of Sales.

Then two complications came along.

The first complication was expansion ARR (annual recurring revenue).  Subscriptions are great, but they’re even better when they get bigger every year — and heck you need a certain amount of that just to offset the natural shrinkage (i.e., churn) that occurs when customers unsubscribe.  Expansion take two forms

  • Incidental:  price increases, extra seats, edition upsells, the kind of “fries with your burger” sales that are a step up from order-taking, but don’t require a lot of salespersonship.
  • Non-incidental:  cross-selling a complementary product, potentially to a different buyer within the account (e.g., selling Service Cloud to a VP of Service where the VP of Sales is using Sales Cloud) or an effectively new sale into different division of an existing account (e.g., selling GE Lighting when GE Aviation is already a customer).

While it was usually quite clear that Sales owned new customer acquisition and Customer Success owned renewals, expansion threw a monkey wrench in the machinery.  New sales models, and new metaphors to go with them, emerged. For example:

  • Hunter-only.  Sales does everything, new customer acquisition, both types of expansion, and even works on renewals.  Customer success is more focused on adoption and technical support.
  • Hunter/farmer.  Sales does new customer acquisition and non-incidental expansion and Customer Success does renewals and incidental expansion.
  • Hunter/hunter.  Where Sales itself is effectively split in two, with one team owning new customer acquisition after which accounts are quickly passed to a very sales-y customer success team whose primary job is to expand the account.
  • Farmers with shotguns.  A variation of hunter/hunter where an initial penetration Sales team focuses on “land” (e.g, with a $25K deal) and then passes the account to a high-end enterprise “expand” team chartered with major expansions (e.g., to $1M).

While different circumstances call for different models, expansion significantly complicated the picture.

The second complication was the rise of the chief revenue officer (CRO).  Generally speaking, sales leaders:

  • Didn’t like their diminished status, owning only a portion of company revenue
  • Were attracted to the buffer value in managing the ARR pool [3]
  • Witnessed too many incidents where Customer Success (who they often viewed as overgrown support people) bungled expansion opportunities and/or failed to maximize deals
  • Could exploit the fact that the check-and-balance between Sales and Customer Success resulted in the CEO getting sucked into a lot of messy operational issues

On this basis, Sales leaders increasingly (if not selflessly) argued that it was better for the CEO and the company if all revenue rolled up under a single person (i.e., me).  A lot of CEOs bought it.  While I’ve run it both ways, I was never one of them.

I think Customer Success should report into the CEO in early- and mid-stage startups.  Why?

  • I want the sales team focused on sales.  Not account management.  Not adoption.  Not renewals.  Not incidental expansion.  I want them focused on winning new deals either at new customers or different divisions of existing customers (non-incidental expansion).  Sales is hard.  They need to be focused on selling.  New ARR is their metric.
  • I want the check and balance.  Sales can be tempted in SaaS companies to book business that they know probably won’t renew.  A smart SaaS company does not want that business.  Since the VP of Customer Success is going to be measured, inter alia, on gross churn, they have a strong incentive call sales out and, if needed, put processes in place to prevent inception churnThe only thing worse than dealing with the problems caused by this check and balance is not hearing about those problems.  When one exec owns pouring water into the bucket and a different one owns stopping it from leaking out, you create a healthy tension within the organization.
  • They can work together without reporting to a single person.  Or, better put, they are always going to report to a single person (you or the CRO) so the question is who?  If you build compensation plans and operational models correctly, Customer Success will flip major expansions to Sales and Sales will flip incidental expansions back to Customer Success.  Remember the two rules in building a Customer Success model — never pair our farmer against the competitor’s hunter, and never use a hunter when a farmer will do.
  • I want the training ground for sales.  A lot of companies take fresh sales development reps (SDRs) and promote them directly to salesreps.  While it sometimes works, it’s risky.  Why not have two paths?  One where they can move directly into sales and one where they can move into Customer Success, close 12 deals per quarter instead of 3, hone their skills on incidental expansion, and, if you have the right model, close any non-incidental expansion the salesrep thinks they can handle?
  • I want the Customer Success team to be more sales-y than support-y.  Ironically, when Customer Success is in Sales you often end up with a more support-oriented Customer Success team.  Why?  The salesreps have all the power; they want to keep everything sales-y to themselves, and Customer Success gets relegated to a more support-like role.  It doesn’t have to be this way; it just often is.  In my generally preferred model, Customer Success is renewals- and expansion-focused, not support-focused, and that enables them to add more value to the business.  For example, when a customer is facing a non-support technical challenge (e.g., making a new set of reports), their first instinct will be to sell them professional services, not simply build it for the customer themselves.  To latter is to turn Customer Success into free consulting and support, starting a cycle that only spirals.  The former is keep Customer Success focused on leveraging the resources of the company and its partners to drive adoption, successful achievement of business objectives, renewals, and expansion.

Does this mean a SaaS company can’t have a CRO role if Customer Success does not report into them?  No.  You can call the person chartered with hitting new ARR goals whatever you want to — EVP of Sales, CRO, Santa Claus, Chief Sales Officer, or even President/CRO if you must.  You just shouldn’t have Customer Success report into them.

Personally, I’ve always preferred Sales leaders who like the word “sales” in their title.  That way, as one of my favorites always said, “they’re not surprised when I ask for money.”

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[1] At Salesforce then called Customers for Life.

[2] Corner cases aside and assuming either annual contracts or that ownership is ownership, even if every customer technically isn’t renewing every year.

[3] Ending ARR is usually a far less volatile metric than new ARR.

How Startup CEOs Should Think About the Coronavirus, Part III — Useful Links

This post in part III in a series.  Part I covers the basics of employee communications.  Part II provides information on how several leading companies are handling the situation and offers specific thoughts on financial planning.  This part, a set of curated links that I have found useful, was formerly at the end of part II, but I figured it really should be a standalone post.

While I will try to prevent the list from getting too long, I will update this post from time to time as I find high-quality information resources.

Coronavirus Resources: Silicon Valley / Business Orientation

Coronavirus Resources: Authorities on Twitter

Coronavirus Resources: Public Health Agencies