Office Hours with Tomasz Tunguz & Bill Binch

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.