Lenny's Podcast: Product | Career | Growth
00:57:10 · Lenny Rachitsky, Jen Abel
[00:57:10] S0: And do you include this slide or the price in the demo or is that a post-demo conversation? [00:57:15] S1: If they push you to do it, give a ballpark, but do pricing one on one with the individual you've been working with because they will help ... They might say, "Okay, I think we're all aligned." This is what's usually going to happen. There's three answers. "We're all aligned," "I'm not too concerned about this," "I don't know if I feel comfortable going to bat with this number." That's when you say, "Okay, I hear you. Let's take a step back. Let's figure out how to make this work." Don't say you're going to discount. Don't throw out numbers. Be like, "I need your help to tell me how to make this work." Now, this is the one part where you want to put it on them because they might come back and say, "Is there any way we can cut 20k?" and you're like, "Oh, I would've gone much lower than that," right? You don't want to negotiate with yourself, but work with them. You've gotten to this point, you've shown so many people, everyone's excited. This is when you know you can win them over through the co-authorship. And remember, you can always do the full value in year two and sign a two-year deal. [00:58:21] S0: Awesome. Expand. Okay. So in the pilot step, how many people do you give access to the pilot? Any advice there? [00:58:30] S1: Three to four. [00:58:32] S0: Okay, so very small.
00:58:32 · Lenny Rachitsky, Jen Abel
[00:58:32] S0: Okay, so very small. [00:58:33] S1: Very small, very tight. Who are the power users? Who are the people that are going to be in on a daily level? You don't want everyone in there. You want it to feel like they're buying into it too, not the same people and the same ... But you do want that one individual that's been giving you all this intel to be part of the pilot because you want them to get you prepped for everything. [00:58:52] S0: So before we get to the next step, which is post-pilot discussion and session, I imagine many products, especially today, just take a lot of integration work and data ingestion and all that stuff, this whole FDE emergence. Thoughts there if your product is just like, "Wow, it's going to take us a month to even get you onboarded." [00:59:14] S1: And that's when we talked about those two different pilots, there's like, "Hey, we can show you the value in two to three days," or it's the, "Hey, we have to show you the value in 30 days." For the 30-day value, charge and credit it back to them, but know that your sales cycle is going to probably be a month longer because of that. But that's okay because you're probably charging more anyway. [00:59:33] S0: Got it. And just do the work to integrate enough to make it magical. [00:59:36] S1: Your price should be predicated on your sales cycle, right? If you can get a deal done in 90 days for 100k, do that all the time, right? If it takes nine months to get a deal done, you probably should be charging 250-300k.
00:59:36 · Jen Abel, Lenny Rachitsky
[00:59:36] S1: Your price should be predicated on your sales cycle, right? If you can get a deal done in 90 days for 100k, do that all the time, right? If it takes nine months to get a deal done, you probably should be charging 250-300k. [00:59:48] S0: What are your thoughts on forward-deployed engineers as a part of this process, just as a role? [00:59:52] S1: My opinions sway back and forth like, "Is a forward-deployed engineer there because the product's super hard to navigate or is it there because you're taking the work off their plate?" I think people use them ... I'm all about it if it's taking the work off their plate and accelerating and controlling the situation all day, every day. "But are you using a forward-deployed engineer because your product's so gnarly and hard to do, like they can't do it on their own?" [01:00:23] S0: It's a bad sign. [01:00:24] S1: Yeah. [01:00:25] S0: Yeah. I feel like the original idea of forward-deployed engineer, and the Palantir guys talk about this, the original idea was they work inside of your company building custom software for you to solve your problems and then they figure out how to make that a broad product they can sell to other people. [01:00:42] S1: Totally. And I think that an FDE is great for an expansion for a land. Okay, if you're talking about a Palantir where it's much more complex to ... I understand why they did that, but they're also charging multimillion dollar deals- [01:00:57] S0: That's right.
01:00:57 · Lenny Rachitsky, Jen Abel
[01:00:57] S0: That's right. [01:00:58] S1: ... right? So the business model structure supports that. If you're selling a $100,000 deal and you're pulling a forward-deployed ... Your economics, it's going to get messy. [01:01:08] S0: Just like you will not make money if you have a full-time engineer salesperson sitting here working on this. [01:01:13] S1: Totally. And I think I also know there's a lot of folks in account management whose job is to service and expand and upsell and they just take on the title of FDE, so they're just another salesperson. [01:01:26] S0: Yeah, just a nice ... Yeah, it's a cool title. I think the Palantir people called FDEs at most companies sparkling sales engineers. [01:01:32] S1: That's awesome. [01:01:33] S0: Yeah. Okay. Anything else on the up-to-the-pilot step before we get to the post-pilot session? [01:01:39] S1: Yeah, I think, because now you've talked about the timeline to, "If this is successful, what does that look like?" again, you want to run this before you put everyone in it because you might want to push out the pilot. If they're like, "Hey, listen, this is probably going to be another quarter." Well, put the people in the pilot now because now you've lost all the ... You need the momentum to continue and you need the steps to happen, so use that, "Hey, if this is a successful pilot, how far out are we from a commitment from you guys?" [01:02:05] S0: Oh, I see, commitment. So there's the commitment, which is equivalent to rolling it out to the company. [01:02:11] S1: That's exactly right.
01:02:11 · Jen Abel, Lenny Rachitsky
[01:02:11] S1: That's exactly right. [01:02:11] S0: If they're not ready in a month to roll this out, if this is a huge success, then wait on doing the pilot. [01:02:15] S1: Wait, correct. Yeah. [01:02:17] S0: Awesome. Because you're saying you may lose that momentum and they're like- [01:02:20] S1: Yeah, you've already exhausted all the stages. You don't want to do that. You want the stages to align with how they're thinking, but you want to project management as tightly as you can. [01:02:30] S0: I love that. [01:02:31] S1: And sometimes it's out of your control, but yeah. [01:02:33] S0: Yeah, and it's not like you can push them to deploy it broadly. That's a thing that is probably very hard to shift. So yeah, so understanding that and working with that seems really important. Okay, so step 10. And again, as you pointed out at the beginning, most people think the sales process is five steps and we're already in step 10. We're not even done. And you made this point actually before we started recording that you haven't touched on that I think is important to share this idea of that these five steps emerged out of a CRM pipeline check thing. Talk a bit about that.
01:03:05 · Jen Abel, Lenny Rachitsky
[01:03:05] S1: Yeah, so everyone knows the traditional five steps, intro, demo, proposal, contracting and then close won or close loss. Those are the typical ... Maybe there's some variation of that. That's not how you run the sales ... Those are buckets to understand how to understand a weighted forecast, right? A proposal or something mid-funnel might be weighted at 50% of the deal value for the pipeline. Something in contracting might be weighted at 80% and something in intro might be weighted at 10%. That's what those stages are for. That's not the stages you take a client through. Those are just the broad buckets. And I think a lot of people use those buckets to say, "Okay, there's about five different meetings that need to happen," when it's like, "No, there's three meetings, maybe up to five meetings in each of those buckets that are critical to get the deal done." Now, we're still speaking at it at a very macro level. Obviously selling a million dollar deal, you want to have more of those upfront meetings and you want to make sure you know who the executive sponsor is and all that. You always want to know who the executive sponsor is, but for a 100k deal, you probably can accelerate it a little faster, again, ensuring that they're qualified. [01:04:23] S0: I know you've worked with a lot of founders and salespeople over the years. What percentage do you think are just doing it wrong in that way and treating it like this five-step process? [01:04:33] S1: 90%. [01:04:34] S0: Wow.