The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:18:26 · Carles Reina, Harry Stebbings
[00:18:26] S0: So we've had that as well at ElevenLabs multiple times, right? There's a portion of the customers that we oversold, and then they kept kind of flat. Part of the big effort always is like, how do you find new use cases for them and how do you show them additional value? So you need to knock on people's doors. Even if you sign an inbound deal, that is one deal that is inbound. But you should not be thinking that that is done. It's like, then you need to transform it into an outbound opportunity as well. And then to do an outbound opportunity, like, Okay, now I have an MSA signed with an order form. Let's actually go and outbound every single other team that might be relevant across the entire organization to show them what the capabilities are. That is the only way you actually expand a deal. But not only that, it's like the most important question is, how do you retain them forever? Because if there is only one team that uses you, that team at some point might get pissed, someone might pitch them, you lose the deal. [00:19:19] S1: Who's responsible for this internally? Is it CS? Is it product? Is it sales? [00:19:23] S0: Depends how you wanna organize it. Some companies call it account management, right? What do [00:19:26] S1: you do?
00:19:26 · Harry Stebbings, Carles Reina
[00:19:26] S1: you do? [00:19:27] S0: We do account execs and customer success. So for us, once a deal is signed, we transfer it to customer success. Customer success is responsible for the upselling, negotiations, all of that stuff. Now, the difference is in the enterprise segment. So very large customers, right? So name account lists, companies that have over 2,000 employees and things like that. Then for those ones, my request to the account exec is like, Your job is not finished. Even if you transfer it to a customer success manager, I still want you to go and upsell and find new opportunities in the account because you're incentivized. And if I'm an account exec, let's be very honest. Everyone loves money and making money as an account exec. So Joni and Sanders say, like, You went through hell for the past sixty days to close an enterprise contract. Fantastic. Then that contract is signed. Getting the next team on board is relatively simple because you've actually gone through the actual signing of the contract. So just outbound, open new doors, and we'll pay you even more commissions because, like, you're... You keep accruing more. Right? [00:20:28] S1: Help me understand as a founder, how do I create a comp plan for sales reps first, And then second, how do I create a comp plan for sales reps to upsell efficiently?
00:20:28 · Harry Stebbings, Carles Reina
[00:20:28] S1: Help me understand as a founder, how do I create a comp plan for sales reps first, And then second, how do I create a comp plan for sales reps to upsell efficiently? [00:20:39] S0: I think in reality, it's pretty much exactly the same in the sense that what we do at ElevenLabs is I set up this threshold, which is like we ask everyone to bring 20 times their base salary. That's your quota, right? So if I pay you 100 ks a year, your quota is $2,000,000 That's it. If you don't achieve your quota, then you're gonna be out, right? And we're ruthless on that end. So everyone actually smashes their quota to ElevenLabs. I would rather have smaller teams that, like, smash their quotas and then pay the money. [00:21:05] S1: What percent do you hit their quota? [00:21:07] S0: Today, it's more than 80% hit their quota. Wow. Right? And they unlock accelerators and all of that stuff. But the interesting piece, like, on the upsell side is we compensate both the account exec and the CSM. If the contract is absolved, if we upsell a company within the first twelve months, the account exec continues to accrue like quota retirement and also like commissions, and the CSM is compensated an NRR. Right? So I'm paying double, but I don't care. It makes perfect sense because then I have these two people busting their ass to make sure that they actually can make more money, which is fantastic for me as a company.
00:21:07 · Carles Reina, Harry Stebbings
[00:21:07] S0: Today, it's more than 80% hit their quota. Wow. Right? And they unlock accelerators and all of that stuff. But the interesting piece, like, on the upsell side is we compensate both the account exec and the CSM. If the contract is absolved, if we upsell a company within the first twelve months, the account exec continues to accrue like quota retirement and also like commissions, and the CSM is compensated an NRR. Right? So I'm paying double, but I don't care. It makes perfect sense because then I have these two people busting their ass to make sure that they actually can make more money, which is fantastic for me as a company. [00:21:43] S1: Totally get that. Again, I just want to pick on some things you said You said that 80% is phenomenal given the ambitiousness of 20x. If you're advising me as a founder, is that 20x a good rule of thumb, or do you think that's specific to the margin profile of ElevenLabs?
00:21:43 · Harry Stebbings, Carles Reina
[00:21:43] S1: Totally get that. Again, I just want to pick on some things you said You said that 80% is phenomenal given the ambitiousness of 20x. If you're advising me as a founder, is that 20x a good rule of thumb, or do you think that's specific to the margin profile of ElevenLabs? [00:21:57] S0: I think like the reality is like every business will be slightly different depending on the industry you're selling, right? So what I always tell everyone is like, let's start with 20x, And then you can adjust. What I told everyone in the company, like, the first account execs that I hired was like, Guys, I have absolutely no clue if 20x is gonna be the right number or not. The standard in SaaS is that you have somewhere around six to seven, maybe eight, maybe 10, right? That is the standard. I know this is what you are expecting. This is not how we're gonna be building a company at ElevenLabs. If you're thinking about doing the same that you've been doing at Notion or all of these places like Salesforce and so on, then you're in the wrong place. So we'll experiment. If we get it wrong, absolutely fine. We'll compensate you correctly, and then essentially we will change the entire composition structure. But if we get it right, which I think it is the right number, this is what we're gonna keep. And we've kept this in day one. We've been running with this for the past two and [00:22:47] S1: a half years. Of the 20% that don't, what do they get wrong? When you look at that cohort, what do you learn when you're looking at the next hires?
00:22:57 · Carles Reina
[00:22:57] S0: So there is two buckets within this 20%, right? One is like people that truly don't fit in the company, And what they get wrong is fundamentally like they're not product experts. Like they haven't actually dived deeper enough in the product that actually can understand it. They have the aggressivity to actually go into the market outbound and so on, right? Those guys, unfortunately, we terminate the contracts. We give them a compensation, so we usually pay anywhere between two to three months of base salary so that we tell them, Hey guys, it didn't work out. We do believe that you are very strong. It didn't work out at ElevenLabs because of the way we do things, but you're going go somewhere else. And we're going help you get somewhere else. That's why we're you this two or three months compensation severance package. And you can do super well. So it's us. It is not you. It is us fundamentally, right? The other percentage of people that don't get into that 80% is people that are building long term pipelines. So I have a guy, for instance, and there's been plenty of them over the past two years, but this guy that we hired from AWS, mega smart guy. Super good. And you look at the core numbers and you're thinking, Shit, I should be fighting this guy. He's not hitting the quota. He's less than 50% quota, right? And then any other person would have looked at the numbers and be like, This is not a fit. I cannot keep this person. Talk to any investors and would tell you, like, Fire this person. Like, It's just not a fit. You dive into the numbers and you realize, like, Oh, it's because he went to the proper enterprise cycle and he's building the most amazing commerce you can have in the entire UK region. Wait a second. Why would I fire this person when he actually needs a lot more ramp, fundamentally because he's tackling the difficult, challenging industries? We kept that person, and this person absolutely smashed it this year. 200 plus percent quota. So you need to actually differentiate, like, what is it actually someone that doesn't fit in the company for a variety of reasons, and who is actually building a proper pipeline over the long term, and they need a little bit more help.