Building a world-class sales org | Jason Lemkin (SaaStr)

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Jason Lemkin created and runs SaaStr, the world’s largest community for B2B/SaaS founders, and is the managing director of SaaStr Fund, a $90 million venture capital firm specializing in early-stage enterprise investments. He is also the mastermind behind two major tech conferences each year—one in the Bay Area, drawing in over 15,000 people, and another in Europe, with a crowd of more than 3,000 SaaS executives, founders, and entrepreneurs. Before SaaStr, Jason wore many hats: CEO and co-founder of EchoSign (later bought by Adobe), vice president at Adobe Systems, co-founder and president of NanoGram Devices Corp., vice president of NeoPhotonics, and a senior director at BabyCenter. In our conversation, we discuss:

• How far you should go without a salesperson

• Signs it’s time to hire salespeople

• Why you need to hire two salespeople

• How to compensate your salespeople

• How to interview salespeople

• When to hire a VP of Sales

• How to prevent their flaming out

• How to scale your sales org

• How to improve the relationship between your sales and product teams

• Much more

Some takeaways:

1. Hire your first salesperson when you have closed the first 10 customers and are spending more than 20% of your time on sales. Don’t be swayed solely by impressive resumes or acronyms; instead, seek out those individuals who you would personally buy your product from.

2. Instead of rushing to hire a VP early in the startup phase, wait until you have established a repeatable sales process and witnessed success with initial sales reps hitting quota. Hire a VP of Sales to help you scale from three sales reps to 300 reps.

3. Make sure your VP of Sales actually wants to sell, not just manage.

4. Prioritize the early success of sales reps by allowing them to keep 100% of their initial sales for the first three months. This provides an opportunity to assess their capabilities without immediate financial pressure.

5. If your salespeople are making substantial money, it’s a sign that the company is succeeding and the equity of both the reps and the founders is increasing in value. Therefore, don’t be discouraged if your sales team members are making significant earnings, as it correlates with the overall success and growth of the business.

6. Involve sales in product development to ensure alignment between customer needs and product roadmap. Initiate a weekly meeting between the VP of Sales and the VP of Product to discuss the budget allocation for feature requests and prioritize it. This regular interaction ensures that both teams are aligned on priorities and helps prevent last-minute disruptions.

7. Unlike building a product team, there is no efficiency when building a sales org: half of your headcount will be in sales at $10m, $50m, or $100m in revenue. This means building a sales org requires a different approach. Jason recommends that founders follow the “rule of eights” when scaling their sales org: 8 sales reps need a manager, 8 account or sales executives need a director, and a VP may have 8 senior reports.

8. A common mistake founders make is expecting to close the deal in the first or second meeting. Instead, you should play the long game. Ensure that there are clear next steps after every meeting, even if it’s doing a demo for someone else in the company. The best salespeople don’t throw a Hail Mary—they advance the ball into the red zone. Once you’re in the red zone, that’s when you ask for money and close the deal.

Listen now on Apple, Spotify, Overcast, and YouTube.

Where to find Jason Lemkin:

• X: https://twitter.com/jasonlk

• LinkedIn: https://www.linkedin.com/in/jasonmlemkin/

• Website: https://www.saastr.com/

Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

In this episode, we cover:

(00:00) Jason’s background

(06:18) The importance of sales in B2B businesses

(11:23) Signs that you should start hiring salespeople

(14:19) Attributes to look for in early sales reps

(19:08) Hiring a VP of Sales

(26:43) The role of a VP of Sales

(30:06) Interviewing salespeople

(45:16) Determining sales compensation and quota

(53:34) Transitioning from 100% commission to a smaller percentage

(56:58) Indicators of a hard-to-sell product

(59:39) Scaling the sales organization

(01:05:26) Understanding sales roles and titles

(01:10:02) Product involvement in sales, and vice versa

(01:20:32) Thoughts on product teams taking on P&L responsibilities

(01:27:23) One thing founders can do to become better at sales

(01:31:02) The ideal trial length for a free trial sales team

(01:39:50) Closing thoughts

(01:41:43) Lightning round

Referenced:

• Marc Benioff on LinkedIn: https://www.linkedin.com/in/marcbenioff/

• Snowflake: https://www.snowflake.com/en/

• Yamini Rangan on LinkedIn: https://www.linkedin.com/in/yaminirangan/

• Salesforce: https://www.salesforce.com/

• HubSpot: https://www.hubspot.com/

• Twilio: https://www.twilio.com/

• Cloudflare: https://www.cloudflare.com/

• GitHub: https://github.com/

• Columbo: https://www.imdb.com/title/tt1466074/

• What is Davos and why is it important? Your guide to the World Economic Forum’s annual meeting: https://www.euronews.com/next/2024/01/15/what-is-davos-and-why-is-it-important-your-guide-to-the-world-economic-forums-annual-meeti

• Adobe: https://www.adobe.com/

• Satya Nadella on LinkedIn: https://www.linkedin.com/in/satyanadella/

• Glengarry Glen Ross on Prime Video: https://www.amazon.com/Glengarry-Glen-Ross-James-Foley/dp/B002NN5F7A

• The Wolf of Wall Street on Prime Video: https://www.amazon.com/Wolf-Wall-Street-Leonardo-DiCaprio/dp/B00IIU9FQY

• A step-by-step guide to crafting a sales pitch that wins | April Dunford (author of Obviously Awesome and Sales Pitch): https://www.lennyspodcast.com/a-step-by-step-guide-to-crafting-a-sales-pitch-that-wins-april-dunford-author-of-obviously-awesom/

• Pipedrive: https://www.pipedrive.com/

• Sam Blond on LinkedIn: https://www.linkedin.com/in/sam-blond-791026b/

• Gong: https://www.gong.io/

• Zendesk: https://www.zendesk.com/

• ZoomInfo: https://www.zoominfo.com/

• Apollo: https://www.apollo.io/

• Daniel Chait on LinkedIn: https://www.linkedin.com/in/dhchait/

• SAP: https://www.sap.com/

• Lessons on building product sense, navigating AI, optimizing the first mile, and making it through the messy middle | Scott Belsky (Adobe, Behance): https://www.lennyspodcast.com/lessons-on-building-product-sense-navigating-ai-optimizing-the-first-mile-and-making-it-through-t/

• VistaPrint: https://www.vistaprint.com/

• Procore: https://www.procore.com/

• Matt Mullenweg on LinkedIn: https://www.linkedin.com/in/mattm/

• Wordpress: https://wordpress.com/

• SaaStr University: https://app.saastruniversity.com/collections/20252

• From Impossible to Inevitable: How SaaS and Other Hyper-Growth Companies Create Predictable Revenue: https://www.amazon.com/Impossible-Inevitable-Hyper-Growth-Companies-Predictable/dp/1119531691

• Pavilion: https://www.joinpavilion.com/

• Top 10 Learnings about Free Trials with Tomasz Tunguz: https://www.youtube.com/watch?v=tfQNJpnxmMw

• The Terminal List on Prime Video: https://www.amazon.com/The-Terminal-List-Season-1/dp/B09HYNH8TK

• Top Gun: Maverick on Paramount: https://www.paramountmovies.com/movies/top-gun-maverick

• OpusClip app: https://www.opus.pro/

• OnePlus Open smartphone: https://www.amazon.com/OnePlus-Dual-SIM-Unlocked-Smartphone-Hasselblad/dp/B0CHN7M531/

• SaaStr conferences: https://www.saastr.com/events/

• Marketo: https://go.marketo.com/about-marketo-landingpage-emea.html

• Zoomtopia: https://zoomtopia.com/

• Money20/20: https://us.money2020.com/

• Shoptalk: https://shoptalk.com/

• Jeff Lawson on LinkedIn: https://www.linkedin.com/in/jeffiel/

• Eric Kwan on LinkedIn: https://www.linkedin.com/in/erickwan/

Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

Lenny may be an investor in the companies discussed.