Office Hours with Tomasz Tunguz & Bill Binch

08/16/22 • 51 min

Office Hours welcomed Bill Binch, former CRO at Pendo, EVP Worldwide Sales at Marketo & operating partner at Battery to share his views on building world-class sales organizations.

Bill & I exchanged emails about Deliberately Underselling as Sales Strategy. I asked him to share his views on land & expand team structure & quotas. But we covered much more. Here are three highlights from the session.

First, Deliberately Underselling means optimizing the sales process for Net Dollar Retention (NDR). Logo-based quotas focus the team on speed to close. Sometimes, these plans have a minimum contract value plus a bounty.

Another structure establishes land account executives & expand account executives. The company’s leadership should calculate sales efficiency on the combined OTE (on-target earnings) to quota ratio of these teams.

A land AE with a $300k OTE might have a $600k quota. Her land AE counterpart might also have a $300k OTE with a $2.8m quota. If they attain plan, the combined OTE/quota ratio is 0.176. Most startups operate between 0.15-0.25.

This land & expand team construct recognizes the difference in difficulty between landing & expanding accounts; also, the potential difference in ideal AE for each role. Last, the plan compensates those responsible for growing accounts with a quota - in line with Frank Slootman’s philosophy.

Second, Bill offered a bold prediction. Top startups will record 200-300% NDR as PLG becomes a dominant go-to-market strategy. Today, best-in-class tops out at 170% or so. We agree there!

Third, Bill revealed his Mojo Metric, his north-star metric. The Mojo Metric reports the net change in pipeline daily. Here’s how to calculate yours:

Mojo = new pipeline + new_pipeline_expanded + deals_pulled_forward deals_killed - deals_shrunk - deals_pushed

Each day’s Mojo reveals how much incremental pipeline the team has generated & informs the sales leader early on about this quarter’s health.

There’s much more in the session including handling commissions on multi-year deals (TCV vs ACV), criteria for evaluating ramping account executives that echoes insights from the Vista sales playbook, optimal ratios for team construction, how sales has changed in 30 years & how it changes after Covid, amongst other topics.

Office Hours welcomed Bill Binch, former CRO at Pendo, EVP Worldwide Sales at Marketo & operating partner at Battery to share his views on building world-class sales organizations.

Second, Bill offered a bold prediction. Top startups will record 200-300% NDR as PLG becomes a dominant go-to-market strategy. Today, best-in-class tops out at 170% or so. We agree there!

Third, Bill revealed his Mojo Metric, his north-star metric. The Mojo Metric reports the net change in pipeline daily. Here’s how to calculate yours:

Mojo = new pipeline + new_pipeline_expanded + deals_pulled_forward deals_killed - deals_shrunk - deals_pushed

Each day’s Mojo reveals how much incremental pipeline the team has generated & informs the sales leader early on about this quarter’s health.

Previous Episode

Office Hours with Tomasz Tunguz & Lars Nilsson

Office Hours welcomed Lars Nilsson, VP Sales Development from Snowflake to talk about his learnings across 5 companies he helped take public.

Throughout the hour, Lars provided insightful perspectives on how to build sales organizations. These the five most memorable takeaways for me.

In early-stage companies, founders sell for the first three to four quarters. Then, many founders opt to hire an AE. Hiring a sales or business-development representative (SDR/BDR) can be the better choice. Incoming account executives will want to see a significant lead volume before joining, especially when selling into the enterprise.

Teams often overlook storytelling as a critical part of effective lead generation. Fear-of-missing-out or the inspiration of a potential future, stories equip champions inside customer organizations to sell the product through the buying process. Founders validate the effectiveness of their stories when hiring SDRs better. SDRs call ten-times as many prospects as AEs do. Much the better to iterate with greater speed and confidence.

As the company grows, building the sales development team becomes the most productive source of pipeline particularly for enterprise-grade technical products. Hire for hunger. Then surround the new SDR/BDR with three pillars: strong training materials, a manager who cares about the employee’s success, and a peer to accelerate learning.

At Snowflake, sales development lives within the marketing team. Lars manages his team through a single metric, meetings. Getting to an account late, a few days or a week after they’ve signed with a competitor accrues to the meeting metric (see why in the video).

Last, exiting unlikely sales processes saves the company’s resources and boosts team morale. Closed - no decision is the worst outcome of an engagement.

We covered much more in the session including the techniques Snowflake uses to align account-based marketing with sales development & sales teams; how to structure career paths within the team; transitioning accounts between SDRs/BDRs to account executives; and the right SDR:AE ratios as companies scale.

Thank you, Lars, for the masterclass on sales development.

Next Episode

Office Hours with Tomasz Tunguz & Carilu Dietrich

On October 18th at 10am Pacific, Office Hours will host Carilu Dietrich. Carilu headed corporate marketing for Atlassian from $150m to $450m in revenue & through their massively successful IPO. Since then, she’s advised Segment, Kong, Miro, Bill.com & 1Password, among many others. Needless to say, her vista across many leading SaaS companies marketing practices is exceptional. During the Office Hours, we’ll discuss: the role of marketing in PLG motions. debate the two different ways of trimming marketing spend : better to cut people or programs? how to develop excellent positioning for a business. When to rebrand a company? If you’re interested to attend, please register here. As always, we will collect questions from participants before the event, weave them into the conversation, and answer live questions at the end of the session. I look forward to welcoming Carilu to Office Hours!