Protect the Hustle | A SaaS Podcast
00:11:29 · Doug Pepper
[00:11:29] S2: Yep. I think it is, and I think there's lots of analogies you could use. I was on a board call where the CRO of one of our great companies said that one of the challenges he has as an operator is that his team, the salespeople, are a summertime team that is not prepared for winter. And I thought that was pretty apt. I think that for all of us, it was summertime for a long time. The weather was nice and the environment was pleasant. And now it's more challenging. So I don't think it's just CEOs. I think it's all of us who have to prepare to adjust for more of a winter like set of conditions. I think we're all making that adjustment. But I think for CEOs, you know, I'm seeing many of our CEOs adjust really well, by the way, but I think it's being prepared and able to make tougher decisions more quickly. And what are those tough decisions? Obviously, you know, the hardest one for them and many of them is deciding that they've hired too many people over the last year or two that does not match the needs going forward. And the hardest thing for a CEO is to let go of good people who otherwise are doing all the right things. But the wartime CEO is making those very tough decisions and making them quickly and proactively. The other key decisions are the decisions of saying no. During summertime, you say yes a lot. Yes, let's go to Europe. Yes, let's move into Japan and Asia. Yes, we'll add that new product line. Yes, we'll add to our ideal customer profile. And I think the wartime CEO is saying no more often and largely operating under the word focus. Let's do fewer things better. Let's pick and prioritize one or two key initiatives. And that's what we're doing during the tougher times. And and I'm seeing the wartime CEO make those those very important. Sometimes it feels like ruthless decisions in order to to bring the companies forward a drive.
00:13:40 · Andrew Davies
[00:13:40] S1: And you hit on a really interesting point there in that phrase. We've got a summertime team that's not prepared for winter that your CRO, colleague was talking about. So how do we prepare our teams for winter? People who've perhaps only been in the workplace while it's been summertime or while it's been in the last few years of real strong economic climate, the tailwinds you've discussed. How do we communicate and reset expectations with the summertime team?
00:14:04 · Doug Pepper, Andrew Davies
[00:14:04] S2: Yeah. I mean, I don't think there's any magic to it. And the truth is, let's be honest, you know, it's the CEOs that are doing it, not us as they do everything. But the ones that I see successfully doing it, like almost every message that a CEO tries to carry to its employees, you kind of have to say it over and over. That's how great CEOs are with the broad vision of their company. And also, I think this reset is over and over being able to communicate transparently why it's important. And then, again, almost like any important new behavior, trying to pull out the best examples that somebody who is on the forward side of this, you know, how they're selling, how it's working, why this new motion might matter, explaining the details, being specific about the numbers. Here's our cash. Here's our current burn rate. Here's the runway if we don't do something. Do you think that we should fundraise in 2023? Or does everybody feel like it makes sense to raise in 2024? And I think having those types of conversations really pulls people along and helps them understand why and how of how you prepare for this time. And you mentioned that many companies are realizing they have to change how they sell because they're now selling to [00:15:20] S1: a CFO decision maker rather than the prior decision maker because everything's being run past the finance office. How are you seeing people adjust to that new persona in their buying committee? Are there some lessons we can learn there?
00:15:31 · Doug Pepper
[00:15:31] S2: Yeah, it's amazing how I think I've had four board meetings in the last seven business days, each one of them separately kind of coming to this conclusion of the reality of the new sales motion, which is what you described. You know, you can't just sell that marketing solution to the head of demand gen or the H. R. Solution to the recruiting manager. You could in 2021. They had a credit card and they could swipe it. Today, they don't have that ability anymore. And by the way, they often don't know it until it's time to get the signature. And then they find out, Oh, I don't have the budget. And so we're having to proactively work with those people to make sure that they have the buy in of their senior leadership. And so we have to empower those people with the right data and the right message to sell their economic, you know, the economic buyer in their company. And so what's changed? One is, you know, we have to have people that have the tools and the messages to talk that higher level message. And that higher level message is about productivity. It's about ROI. It's about the immediacy of that ROI. Some things that we weren't talking as much about before is we have to give them the tools, literally the calculators to calculate those ROI and value propositions that are the only way that you could sell anything today. You know, we have to give those salespeople the confidence to go talk to a higher level seller buyer. It's intimidating to go to a CFO versus the domain expert that you know well, the HR manager that you might have been one day in the past. Now you're talking to the CFO and you don't know that persona as well. It's all those things that go into selling differently and this value selling is so important today. And the truth is, you know, the wintertime team or the summertime team, not all of those people are able to make that transition to be able to sell higher and sell more of a value message. But every company simultaneously is realizing that they need to do this. And the reality is not every company is going to be successful because now the CFO is getting flooded with all of these opportunities and they're not going to choose all of them. And the must have versus nice to have line is now brighter than it has ever been. And that line is moving up. And the CFO is prioritizing what are the things that we must have.
00:18:01 · Doug Pepper, Andrew Davies, Andrew Davies
And in 2021, things that were below that line still got purchased. And today they're not. [00:18:11] S0: And in this section, Doug will give you the three metrics to focus on for continued success. [00:18:19] S1: You mentioned that in communicating to our teams, one of the things we can do is point to examples of success or green shoots that are coming around the corner. Are there any parallels across different companies you're seeing of where those green shoots lie? Are there any, you know, things that you're seeing frequently reoccur of new products or markets or ways of messaging that people should lean into in this time?
00:18:43 · Doug Pepper
[00:18:43] S2: Well, the first thing I'd say is that it helps to be in the right categories. That isn't that true of of all of all moments is you want to be in the right markets. And, you know, there's certain markets today that are still viewed as core, still viewed as must have. If you're a large enterprise and so many are still in the early stages of this digital transformation of cloud adoption. And so if you're still in the early stages of that and you know you have to do it and they know they do, what are you going to adopt and what do you have to have? Well, you have to have the foundational elements. And a lot of that is about infrastructure. A lot of that is about data and analytics and security. And so we look at the performance of our companies relative to plan by category in our portfolio. And you know, that attainment versus plan is down pretty dramatically quarter over quarter. Q1, still almost 100% of our companies hit plan. Now we're down to, you know, companies are missing plan. I think we're 20% of companies are hitting plan. But if you look at some of those core categories, it's much higher. And those are areas where you have to have data infrastructure, you have to have analytics, core security, and others like that. The challenging areas are ones, again, that are maybe nice to haves. And we're seeing some of the tools, sales tools or sales and marketing add ons, HR add ons, you know, that help you kind of develop maybe a little bit of extra pipeline or help you hire faster, you know, which is obviously a value prop that people aren't looking for as much right now. Those are more challenging. But in marketing, we have companies in marketing that are still doing very well, but they position themselves and they are more core infrastructure. Like you can't do marketing without this piece of infrastructure. Just like you can't do sales without CRM, Salesforce has infrastructure. And so I think it's really important for companies to work to position themselves as not a tool, not an add on, but core infrastructure. Even if you're in marketing or sales or HR, can you position yourself and are you part of the core as opposed to maybe on the periphery a little