The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:23:24 · Max Freeman, Harry Stebbings
[00:23:24] S0: Yeah. I think the right time to verticalize your business is when you need to pull the lever to inflect conversion. I think companies actually verticalize far too early, especially if you have a huge addressable market. You're in land grab market share mode. And so I think verticalizing the business may actually be counterproductive to doing that. But as you own more and more of the market, I think this is arbitrary, but I'd say, you know, three to 5%, guess what? The total amount of opportunities you can go after starts to become contained. And so the lever that you need to pull is you need to be able to convert leads to close one at a higher clip. And so I think that is the moment when you start to verticalize, you know, looking at companies that I think have done this moderately well, the Oracles, the Workdays, the SAPs of the world. That's exactly what they've done. One of the [00:24:16] S1: reasons I like verticalization of sales teams is what it does to sales cycles. Often, the messaging is better. It's more accurate. The value prop's kinda clearer, and I just see a compression in the sales cycle when I see that verticalization. What are the biggest lessons you have on how to compress sales cycles? [00:24:35] S0: The best way to compress sales cycles is qualifying with more rigor. So upstream, you need to understand, does this person have the influence to actually infectuate change? And are they reasonably committed to doing this within a twelve month period? If you could check those boxes, yes, swing swing at
00:24:35 · Max Freeman, Harry Stebbings
[00:24:35] S0: The best way to compress sales cycles is qualifying with more rigor. So upstream, you need to understand, does this person have the influence to actually infectuate change? And are they reasonably committed to doing this within a twelve month period? If you could check those boxes, yes, swing swing at [00:24:52] S1: it. How do you determine that actually? Because a lot of people like to have ego and say they're very important. And a lot of people would like to please you and say, yes, they'll do it fast. How do you actually determine it?
00:24:52 · Harry Stebbings, Max Freeman
[00:24:52] S1: it. How do you determine that actually? Because a lot of people like to have ego and say they're very important. And a lot of people would like to please you and say, yes, they'll do it fast. How do you actually determine it? [00:25:02] S0: Yeah. You you... You've gotta test them. The way to test them is if they're not in the c suite or they don't have a VP title, you have to know who their boss is in the org chart. And so if you've had an unbelievable call and you've earned the right to pull in another stakeholder, you have to ask for it. And there's a subtle way to do this where it's seemingly a gift to get. Hey, Harry. Today was awesome. I have a lot of conviction that we can solve this problem for your business. We're gonna knock this demo out of the park. I'm gonna bring on a bunch of my technical resources. In an effort to bring them onto the call, my ask would be that you bring Susan, your VP of procurement, into this next conversation. You'll know right then and there. Is this person gonna... Is Harry gonna bring Susan into the call? Okay. Great. You may have a champion. You may have someone that can infectuate change. If not, oh, why aren't you? Are you just window shopping? Do you not have a relationship with your boss? Can you not actually do this? So it's it's it's a really good way to test that out.
00:25:02 · Max Freeman, Harry Stebbings
[00:25:02] S0: Yeah. You you... You've gotta test them. The way to test them is if they're not in the c suite or they don't have a VP title, you have to know who their boss is in the org chart. And so if you've had an unbelievable call and you've earned the right to pull in another stakeholder, you have to ask for it. And there's a subtle way to do this where it's seemingly a gift to get. Hey, Harry. Today was awesome. I have a lot of conviction that we can solve this problem for your business. We're gonna knock this demo out of the park. I'm gonna bring on a bunch of my technical resources. In an effort to bring them onto the call, my ask would be that you bring Susan, your VP of procurement, into this next conversation. You'll know right then and there. Is this person gonna... Is Harry gonna bring Susan into the call? Okay. Great. You may have a champion. You may have someone that can infectuate change. If not, oh, why aren't you? Are you just window shopping? Do you not have a relationship with your boss? Can you not actually do this? So it's it's it's a really good way to test that out. [00:25:55] S1: So I I love that, and Susan would love to come. One thing that's really... It's important for us right now is just cost controls. And so, Max, can you help me out here? You... You're saying that you're charging, you know, $4 per card or $4 per seat or $4 per unit of whatever we're selling. I'm gonna need it at two. Are you gonna be able to meet me there, Max? I guess to buy
00:25:55 · Harry Stebbings, Max Freeman
[00:25:55] S1: So I I love that, and Susan would love to come. One thing that's really... It's important for us right now is just cost controls. And so, Max, can you help me out here? You... You're saying that you're charging, you know, $4 per card or $4 per seat or $4 per unit of whatever we're selling. I'm gonna need it at two. Are you gonna be able to meet me there, Max? I guess to buy [00:26:15] S0: something We we haven't even determined technically if this is gonna fit for your organization. And so, look, we we can figure out economics. I think once you see how this product's gonna transform and change your business, it's gonna be a lot more financial impact back to 20 VC than trading $2. [00:26:33] S1: But... So you you don't engage on discounting? Because so many founders say to me, I just don't know how to do it. I wanna close the deal, but they want a 20% discount.
00:26:33 · Harry Stebbings, Max Freeman
[00:26:33] S1: But... So you you don't engage on discounting? Because so many founders say to me, I just don't know how to do it. I wanna close the deal, but they want a 20% discount. [00:26:41] S0: Yeah. I I think, like, early on in the conversation, if we're coming to discuss economics and pricing after call one, that's that's usually a a bad sign. It's not a sophisticated buyer on the other end. Unless it's super down market, you're talking to a 10 person startup founder, and you're trying to one call close, like for sure, maybe I'll I'll engage that way and we'll discount to get the deal in the door. But, upmarket, no, you have to co author business value assessments. Like, really have to understand what are they trying to solve and what does the total cost of ownership look like. Are you trying to get a margin win? Are you trying to make your accounting function more efficient and give yourself FTE leverage? And if you could mutually agree to that, you could circumvent any pricing concessions because, hopefully, you're driving 7 figures in value creation. [00:27:32] S1: Speaking of driving seven figures in value creation, we're gonna go back to this, like, beautiful interview process because I've impressed you so much. You're so excited for me to join ramp day one, and you wanna give me a job. And it's time for comp design. Okay? Compensation design. Mhmm. Can you help me? How do you advise founders on comp design for the first AE and the first SDR?