I was recently lucky to hold a fireside conversation for EVP portfolio companies with experienced enterprise SaaS CMO, CEO, Board Director, angel investor, adviser and all-round Go-To-Market guru Dave Kellogg. The EVP team and portfolio companies have been avid readers of Dave’s well-read blog Kellblog for several years. In the conversation we had the opportunity to delve into some of the topics Dave has written about over the past 20 years.
The actionable concepts Dave spoke about have proven valuable to all who attended, with many of those listening across the EVP portfolio already putting them into practice in their organisations. Below I share some snippets from the discussion for the benefit of those who weren’t able to join.
Quick notes for those on the run:
>> The first sales hire: As a founder, you’re going to spend significant time and energy upskilling your first sales hire on your product, value proposition, business and industry. You may as well do this with someone who has previously built teams so they can scale effectively into a sales manager when the time comes.
>> Scaling your go-to-market team: Be honest with yourself on whether you have the right ingredients in place to scale the sales team. This involves having clarity on hiring profile, training and tools for sales reps, and confidence on quota attainment.
>> US Expansion: Don’t delay offshore expansion out of fear of failure. You may as well find out early if you need to make changes to product / strategy to tackle a global market.
>> Partnerships: Don’t use partners for sales if you don’t know how to sell the product yourself. Partners can be great for secondary markets.
“Colonel Gunpowder” - The first sales hire
We kicked off with Dave discussing the ideal profile of the first non-founder sales hire and why the decision is so critical.
“You're going to spend an enormous amount of time with that first salesperson co-selling deals. You might do it for six months, nine months, twelve months. It's not like a relay where you just hand the baton over. It will almost undoubtedly fail if you just hire a head of sales and say “here, it's up to you now. Have fun. I'm going to go work on product.” That will not work. So, it’s a relay race with an overlap period. The question is, who do you want to be running next to for six to 12 months, holding that baton together? If it goes well, you'll do this once in the history of the company.”
Dave pointed to the conventional wisdom of hiring front-line sales executives and progressively building a team underneath them as flawed, given you end up with a first time sales leader running an expensive sales organisation.
“ The only flaw in that model is that you often end up three or four years in and you're $20, $30 million in sales if it's going really well…but you've got a person running sales who’s never run sales before. So you've invested a lot of knowledge building, a lot of cultural transfer, a huge amount. You've effectively invested in training up a salesperson who doesn't really know how to build and scale a sales force…What you don't want in general in a startup, is every member of the executive team having their current job be the biggest job they've ever had.”
As an alternative pathway, Dave lent on a methodology gleaned from the founder of Moveworks.
“If you're going to make that investment, you want to make that investment in a person who, when you get to release the baton, when you say “you know what, you're now in charge of sales.” That person already knows how to build a sales org.
And they've managed 10, 15, 20 sellers. The general advice is go get a Regional Vice President (RVP) who's managing 20, 30, 40 sellers. So senior enough that they actually know how to build, scale and manage the sales organization. If they work, once you pass the baton off, for the first 20, 30 sellers, that's all stuff they've done before.”
It’s important though that this manager level individual still has the hunger for front-line sales.
“It’s important they still love the game. Which is the hardest ingredient because the occupational hazard of an RVP at a US SaaS company is they're, for lack of a better term, a spreadsheet jockey. They've lost it. They don't have the fight in them anymore. They've been to too many management meetings, too many offsites. And they don't smell like the battlefield anymore.
We used to sell to the army. We had one customer called Colonel Gunpowder, because every time we met with him, they could smell gunpowder on him. And that's what you want. You want somebody who's a colonel. Someone who's pretty high, but not a general. This is back to the RVP switching metaphors. They're pretty high level, but they're in the deals. They love being in the deals. This is not an easy person to find, but they do exist.
You can find people who are second line sales managers managing 20, 30 people who love selling and who love deals.”
It’s important to pitch the role carefully.
“So when you tell them the plan, you say “here's the thing, I've got a great company. We have amazing potential. The good news is I want to hire you. The bad news is I want to give you a bag and you're going to be an individual contributor seller. The good news, you're going to do it right next to me for six or 12 months, and we're going to go on every deal together. And during that time period, you're going to learn everything I know that's needed to sell the software. And then one day I'm going to release the baton to you and you're going to go off and build a sales organization and you're going to have enormous credibility because you'll have sold this stuff yourself.”
To hear more on hiring your first salesperson, check out Dave’s interview on the SaaS revolution podcast here.
“Excel-Induced Hallucination” - Prematurely scaling your go-to-market team
Drawing from his SaaStr Europa talk from 2022, Dave described the most common mistake startups make in the scale-up phase - prematurely accelerating go-to-market.
Dave started with the temptation to scale that results from early signs of sales team success and investors looking for outsized returns.
“So you’ve hired a few sellers and you've got three people working. And then you say, wow, we've built a repeatable sales model, so let's go hire nine more. So it'll take sales from three to 12. We're going to do it in a year. And we're going to do that because we've decided prematurely we have a repeatable model.
And there's more pressure, right? You, you've just raised money. Everybody wants to go, go, go, go, go. So people want to hear, “we're ready to scale!” They don't want to hear “no…wait a minute.”
In reality, we only have three sellers, and one of them is pretty repeatable. One of them is terrible and one's struggling. And if we were to build an onboarding curriculum, we’re not sure what to put in it because we don't know what works yet. Investors don't want to hear that. Nobody wants to hear that. So you're going to get board pressure to say, let's go.
The investors will say “hey, you showed us that amazing plan during the fundraising and if we want to have any chance of hitting that plan, we need to hire three salespeople right now.” And that is, in my mind, the single worst reason to hire a salesperson. We need to hire a salesperson because the model I showed the board says, if I don't, it's impossible to hit that model.
And the logic is, “well, if I don't hire somebody, I have no chance of making it. If I do hire somebody, I might make it.” So let's go for it and let's convince ourselves we're ready, and the board will be happy to hear that. I call this an Excel-induced hallucination.”
As Dave describes, the costs can be severe.
“What you've managed to do is let the model convince yourself that you're ready to do something that maybe you're not ready to do. And this happens all the time. If you've got a VP of sales in there, they almost always die in this transition.
If you make this mistake, the founder survives it, but is wounded. The VP of sales is not so lucky. By my math, hiring and firing a seller and the supporting resources costs about half a million dollars each. If you hire ten salespeople and they all fail, you'll burn around $5 million figuring that out. The investors are now rattled and the employees are now rattled. Employees have seen us massively scale up and fail. So when you do this, it's just not a good thing for the company.”
Dave proceeded to touch on what repeatability looks like with a focus on hiring, tooling and consistently hitting quota.
“The way to avoid premature scaling is to first be realistic in your self assessment. Do we know who to sell to, what to sell them, what messaging works, what competitive messaging works and what pricing works?
If you think of a repeatable sales process, it is really knowing three things. (1) What kind of person are we going to hire? (2) What kind of training, and what tooling are we going to give them? And, (3) can they predictably hit their quota on the back of that?
So if I hire 10 people who look like X, Y, Z and we put them through a training program. We teach 'em how to sell our way. We're going to give 'em our tools and teach 'em how to use them. And can we say that when I pop out 10 of these people, that on average eight of them will be hitting 80% of the quota within 12 months? That's the way you need to think of this. And that's what VCs want.
You want 80% of them hitting 80% of quota. If you could actually convince the VC of that and show it in conjunction with the reasonable CAC ratio and reasonable net and gross retention, they will shower you with money.”
Avoiding premature scaling requires some honest self reflection.
"You should read those blogs and go, how much does this look like me? Or how much does this not look like me? Because most startups are what I call artisanal sales. You have two or three amazing artisans who can pull deals out of nowhere, but maybe they don't even have common backgrounds. Maybe they had no training. Their training was a school of hard knocks on the phone trying to sell your product.
You're actually very far from a machine. You're not a factory that produces salespeople. You're a little boutique shop and there's something wrong with that.
You have to be a successful boutique to get to build the factory. But, what VCs want to pour money into is a factory. And this, this problem happens when you convince yourself you have a factory when you're really a boutique.”
To read more on getting the basics of sales management in place, see Dave’s Ten Point Sales Management Framework here.
“We may as well get our heads blown off early” - International Expansion
For more on this topic, see Dave’s article for Balderton on the Top 5 Mistakes on European Expansion. With extensive experience in both operating and advising, Dave talked through the top mistakes he sees with companies pursuing US expansion.
The biggest and most common mistake he sees is delaying US expansion.
“The first thing is sometimes people are afraid to start. “Oh, well, let's just do France and get really big in France and then we'll do Spain and then we can do Germany. And then once you're really big, then we can go to the US.” You'll hear that a lot in Europe.
Outside of the US, sometimes there's fear of bad news, like, oh my gosh, in Australia there are no other competitors. And in Australia I have home court advantage because Australian people like to buy from us because we're a cute little Australian company. And that makes them happy. And if we go to the US, we're a nobody and we're competing against four companies who haven't come to Australia yet. That's scary. To which I think our very unsympathetic answer is, if your goal is to build a global leader, you may as well find that out early, right?
If your goal is to try and sell to somebody for $10m as part of a tuck-in or a PE, then maybe just go build in Australia only and hope there's somebody who wants to buy that.
But if you truly aspire to be a global company, then if your product's not competitive with company B or C, we don't want to spend three years building a 10 million business in Australia. Instead, attack the US and just get our heads blown off because we have an uncompetitive product. We may as well find that out early and either find a way to beat them on product or change or pivot to another strategy. If your aspiration is to be a global leader, you may as well find out the bad news early.”
Dave talked to the merits of being dragged into offshore markets by well-informed opportunistic buyers even before you pull the trigger on a concerted international expansion effort.
“I like to go accidentally. Somebody calls you and you say, “well, you know, we don't have any support or resources. We got nothing in the US, but if you want to buy anyway, we'll sell you one. We don't even have a US contract, but it doesn't bother me if it doesn't bother you.”
I would go do that because (A) when you eventually do decide to go to the US you'll have some customers, so you'll have some references. (B) It's actually great proof of product market fit. I love when people buy when you have to say, “God, that person was pretty desperate to buy my stuff. Because we're a small company that no one's ever heard of. And this is a well-informed buyer and they've looked everywhere. I'm the last company on earth they want to buy from, from a safety and security perspective. But they're buying from me anyway.” So it says a lot about product market fit in my mind. And it says a lot about uniqueness.”
The second mistake Dave sees is failing in hiring up a team based in the US.
“The second biggest single mistake people make is they don't know how to read US resumes. Because US resumes are hopelessly embellished. And if you've hired in the US you know this already. But I've had Europeans say, “these people are gods.” When they look at their resume, what they've done is incredible. They've single-handedly built a business from zero to 50 million as a sales exec at Siebel. But you have to be able to deconstruct a resume to see what they really did. Get ready for some resumes that are quite amplified relative to reality and make sure you understand what you're hiring. Because most Europeans and Australians will hire a first wave team in the US. It'll be all people who they think are gods, but who are not. They'll fire them, lose a year and start again.”
Number three, make sure you sound American.
“One other one is looking and sounding too European. Literally you'll see demos with this French person in the screenshot or the accent on the videos. “Hey, yo, my name is Jean-Mark!” And it's like, no, that's not going to work. Right? You need to sound American. Get an American narrator, you won't have that problem.”
Finally, he pointed to the importance of sales and marketing.
“In Europe they like to poo-poo sales and marketing. They say “we win on best product!” So there's a strong ethos that the best product wins and that sales and marketing is not something worthy of investing in. In the US you have to rewire it because Americans love sales and marketing and we like to buy from the market leader. We're just like “hey, maybe they don't have the best product but we’ll buy because they're the market leader.” You might have the best product. You know, that's great. Good for you. But you're going to get thumped because I don't perceive you as leading in the market.”
Partnership models?
The audience asked Dave for his thoughts on whether a partner sales model can work for international expansion and how to best deploy it. Dave shared that in principle he’s a fan of the channel, though with two pieces of advice.
First, don’t use partners to do work you don’t know how to do.
“I'm going to tell you the story, there's an old TV commercial in America where there's two older brothers and a little brother and mom buys new cereal and the brothers don't want to eat the cereal. They're like, this is gross. I don't want to eat this. So they force the little brother to eat it. They say, “we'll make Mikey eat it.” And they shove the bowl over to Mikey. And Mikey eats it and he likes it. And he says, well, “Mikey likes it.”
And this is sometimes what companies do with partners. They don't want to eat it, so they're going to try and make a partner do it. And if it's your little brother at the breakfast table, you can force him. But in real life you can't. Don't ask somebody to do something you don't know how to do and/or don’t want to do yourself. So as long as you actually know how to sell it and you could train them and they can be successful, do it.”
Second, be deliberate about which markets you leave for partners to focus on.
“I would do it in the secondary markets. If I was a US company opening Europe, I would do UK, France, and Germany directly myself. And then I would build an alliances team, or a channels team, an international distribution channels team for Spain, Italy, Austria, maybe Nordic countries. One team that supports all those channel distributors in each of those countries.
Because as it turns out, supporting a partner in Brazil is pretty much the same as supporting a partner in Austria which is pretty much the same as supporting a partner in Italy. The core skill we want you to have is supporting partners driving deals. And that skill doesn't vary with geography.”
****
We’re so grateful to have had the opportunity to hear Dave’s thoughts on these critical challenges in scaling B2B software companies. Figuring out how to hire your first salesperson, when to scale your go-to-market team and how to navigate international expansion are critical steps on the road to Australian and New Zealand startup success. We know Dave’s lessons will prove invaluable for the EVP portfolio on this journey.
I was recently lucky to hold a fireside conversation for EVP portfolio companies with experienced enterprise SaaS CMO, CEO, Board Director, angel investor, adviser and all-round Go-To-Market guru Dave Kellogg. The EVP team and portfolio companies have been avid readers of Dave’s well-read blog Kellblog for several years. In the conversation we had the opportunity to delve into some of the topics Dave has written about over the past 20 years.
The actionable concepts Dave spoke about have proven valuable to all who attended, with many of those listening across the EVP portfolio already putting them into practice in their organisations. Below I share some snippets from the discussion for the benefit of those who weren’t able to join.
Quick notes for those on the run:
>> The first sales hire: As a founder, you’re going to spend significant time and energy upskilling your first sales hire on your product, value proposition, business and industry. You may as well do this with someone who has previously built teams so they can scale effectively into a sales manager when the time comes.
>> Scaling your go-to-market team: Be honest with yourself on whether you have the right ingredients in place to scale the sales team. This involves having clarity on hiring profile, training and tools for sales reps, and confidence on quota attainment.
>> US Expansion: Don’t delay offshore expansion out of fear of failure. You may as well find out early if you need to make changes to product / strategy to tackle a global market.
>> Partnerships: Don’t use partners for sales if you don’t know how to sell the product yourself. Partners can be great for secondary markets.
“Colonel Gunpowder” - The first sales hire
We kicked off with Dave discussing the ideal profile of the first non-founder sales hire and why the decision is so critical.
“You're going to spend an enormous amount of time with that first salesperson co-selling deals. You might do it for six months, nine months, twelve months. It's not like a relay where you just hand the baton over. It will almost undoubtedly fail if you just hire a head of sales and say “here, it's up to you now. Have fun. I'm going to go work on product.” That will not work. So, it’s a relay race with an overlap period. The question is, who do you want to be running next to for six to 12 months, holding that baton together? If it goes well, you'll do this once in the history of the company.”
Dave pointed to the conventional wisdom of hiring front-line sales executives and progressively building a team underneath them as flawed, given you end up with a first time sales leader running an expensive sales organisation.
“ The only flaw in that model is that you often end up three or four years in and you're $20, $30 million in sales if it's going really well…but you've got a person running sales who’s never run sales before. So you've invested a lot of knowledge building, a lot of cultural transfer, a huge amount. You've effectively invested in training up a salesperson who doesn't really know how to build and scale a sales force…What you don't want in general in a startup, is every member of the executive team having their current job be the biggest job they've ever had.”
As an alternative pathway, Dave lent on a methodology gleaned from the founder of Moveworks.
“If you're going to make that investment, you want to make that investment in a person who, when you get to release the baton, when you say “you know what, you're now in charge of sales.” That person already knows how to build a sales org.
And they've managed 10, 15, 20 sellers. The general advice is go get a Regional Vice President (RVP) who's managing 20, 30, 40 sellers. So senior enough that they actually know how to build, scale and manage the sales organization. If they work, once you pass the baton off, for the first 20, 30 sellers, that's all stuff they've done before.”
It’s important though that this manager level individual still has the hunger for front-line sales.
“It’s important they still love the game. Which is the hardest ingredient because the occupational hazard of an RVP at a US SaaS company is they're, for lack of a better term, a spreadsheet jockey. They've lost it. They don't have the fight in them anymore. They've been to too many management meetings, too many offsites. And they don't smell like the battlefield anymore.
We used to sell to the army. We had one customer called Colonel Gunpowder, because every time we met with him, they could smell gunpowder on him. And that's what you want. You want somebody who's a colonel. Someone who's pretty high, but not a general. This is back to the RVP switching metaphors. They're pretty high level, but they're in the deals. They love being in the deals. This is not an easy person to find, but they do exist.
You can find people who are second line sales managers managing 20, 30 people who love selling and who love deals.”
It’s important to pitch the role carefully.
“So when you tell them the plan, you say “here's the thing, I've got a great company. We have amazing potential. The good news is I want to hire you. The bad news is I want to give you a bag and you're going to be an individual contributor seller. The good news, you're going to do it right next to me for six or 12 months, and we're going to go on every deal together. And during that time period, you're going to learn everything I know that's needed to sell the software. And then one day I'm going to release the baton to you and you're going to go off and build a sales organization and you're going to have enormous credibility because you'll have sold this stuff yourself.”
To hear more on hiring your first salesperson, check out Dave’s interview on the SaaS revolution podcast here.
“Excel-Induced Hallucination” - Prematurely scaling your go-to-market team
Drawing from his SaaStr Europa talk from 2022, Dave described the most common mistake startups make in the scale-up phase - prematurely accelerating go-to-market.
Dave started with the temptation to scale that results from early signs of sales team success and investors looking for outsized returns.
“So you’ve hired a few sellers and you've got three people working. And then you say, wow, we've built a repeatable sales model, so let's go hire nine more. So it'll take sales from three to 12. We're going to do it in a year. And we're going to do that because we've decided prematurely we have a repeatable model.
And there's more pressure, right? You, you've just raised money. Everybody wants to go, go, go, go, go. So people want to hear, “we're ready to scale!” They don't want to hear “no…wait a minute.”
In reality, we only have three sellers, and one of them is pretty repeatable. One of them is terrible and one's struggling. And if we were to build an onboarding curriculum, we’re not sure what to put in it because we don't know what works yet. Investors don't want to hear that. Nobody wants to hear that. So you're going to get board pressure to say, let's go.
The investors will say “hey, you showed us that amazing plan during the fundraising and if we want to have any chance of hitting that plan, we need to hire three salespeople right now.” And that is, in my mind, the single worst reason to hire a salesperson. We need to hire a salesperson because the model I showed the board says, if I don't, it's impossible to hit that model.
And the logic is, “well, if I don't hire somebody, I have no chance of making it. If I do hire somebody, I might make it.” So let's go for it and let's convince ourselves we're ready, and the board will be happy to hear that. I call this an Excel-induced hallucination.”
As Dave describes, the costs can be severe.
“What you've managed to do is let the model convince yourself that you're ready to do something that maybe you're not ready to do. And this happens all the time. If you've got a VP of sales in there, they almost always die in this transition.
If you make this mistake, the founder survives it, but is wounded. The VP of sales is not so lucky. By my math, hiring and firing a seller and the supporting resources costs about half a million dollars each. If you hire ten salespeople and they all fail, you'll burn around $5 million figuring that out. The investors are now rattled and the employees are now rattled. Employees have seen us massively scale up and fail. So when you do this, it's just not a good thing for the company.”
Dave proceeded to touch on what repeatability looks like with a focus on hiring, tooling and consistently hitting quota.
“The way to avoid premature scaling is to first be realistic in your self assessment. Do we know who to sell to, what to sell them, what messaging works, what competitive messaging works and what pricing works?
If you think of a repeatable sales process, it is really knowing three things. (1) What kind of person are we going to hire? (2) What kind of training, and what tooling are we going to give them? And, (3) can they predictably hit their quota on the back of that?
So if I hire 10 people who look like X, Y, Z and we put them through a training program. We teach 'em how to sell our way. We're going to give 'em our tools and teach 'em how to use them. And can we say that when I pop out 10 of these people, that on average eight of them will be hitting 80% of the quota within 12 months? That's the way you need to think of this. And that's what VCs want.
You want 80% of them hitting 80% of quota. If you could actually convince the VC of that and show it in conjunction with the reasonable CAC ratio and reasonable net and gross retention, they will shower you with money.”
Avoiding premature scaling requires some honest self reflection.
"You should read those blogs and go, how much does this look like me? Or how much does this not look like me? Because most startups are what I call artisanal sales. You have two or three amazing artisans who can pull deals out of nowhere, but maybe they don't even have common backgrounds. Maybe they had no training. Their training was a school of hard knocks on the phone trying to sell your product.
You're actually very far from a machine. You're not a factory that produces salespeople. You're a little boutique shop and there's something wrong with that.
You have to be a successful boutique to get to build the factory. But, what VCs want to pour money into is a factory. And this, this problem happens when you convince yourself you have a factory when you're really a boutique.”
To read more on getting the basics of sales management in place, see Dave’s Ten Point Sales Management Framework here.
“We may as well get our heads blown off early” - International Expansion
For more on this topic, see Dave’s article for Balderton on the Top 5 Mistakes on European Expansion. With extensive experience in both operating and advising, Dave talked through the top mistakes he sees with companies pursuing US expansion.
The biggest and most common mistake he sees is delaying US expansion.
“The first thing is sometimes people are afraid to start. “Oh, well, let's just do France and get really big in France and then we'll do Spain and then we can do Germany. And then once you're really big, then we can go to the US.” You'll hear that a lot in Europe.
Outside of the US, sometimes there's fear of bad news, like, oh my gosh, in Australia there are no other competitors. And in Australia I have home court advantage because Australian people like to buy from us because we're a cute little Australian company. And that makes them happy. And if we go to the US, we're a nobody and we're competing against four companies who haven't come to Australia yet. That's scary. To which I think our very unsympathetic answer is, if your goal is to build a global leader, you may as well find that out early, right?
If your goal is to try and sell to somebody for $10m as part of a tuck-in or a PE, then maybe just go build in Australia only and hope there's somebody who wants to buy that.
But if you truly aspire to be a global company, then if your product's not competitive with company B or C, we don't want to spend three years building a 10 million business in Australia. Instead, attack the US and just get our heads blown off because we have an uncompetitive product. We may as well find that out early and either find a way to beat them on product or change or pivot to another strategy. If your aspiration is to be a global leader, you may as well find out the bad news early.”
Dave talked to the merits of being dragged into offshore markets by well-informed opportunistic buyers even before you pull the trigger on a concerted international expansion effort.
“I like to go accidentally. Somebody calls you and you say, “well, you know, we don't have any support or resources. We got nothing in the US, but if you want to buy anyway, we'll sell you one. We don't even have a US contract, but it doesn't bother me if it doesn't bother you.”
I would go do that because (A) when you eventually do decide to go to the US you'll have some customers, so you'll have some references. (B) It's actually great proof of product market fit. I love when people buy when you have to say, “God, that person was pretty desperate to buy my stuff. Because we're a small company that no one's ever heard of. And this is a well-informed buyer and they've looked everywhere. I'm the last company on earth they want to buy from, from a safety and security perspective. But they're buying from me anyway.” So it says a lot about product market fit in my mind. And it says a lot about uniqueness.”
The second mistake Dave sees is failing in hiring up a team based in the US.
“The second biggest single mistake people make is they don't know how to read US resumes. Because US resumes are hopelessly embellished. And if you've hired in the US you know this already. But I've had Europeans say, “these people are gods.” When they look at their resume, what they've done is incredible. They've single-handedly built a business from zero to 50 million as a sales exec at Siebel. But you have to be able to deconstruct a resume to see what they really did. Get ready for some resumes that are quite amplified relative to reality and make sure you understand what you're hiring. Because most Europeans and Australians will hire a first wave team in the US. It'll be all people who they think are gods, but who are not. They'll fire them, lose a year and start again.”
Number three, make sure you sound American.
“One other one is looking and sounding too European. Literally you'll see demos with this French person in the screenshot or the accent on the videos. “Hey, yo, my name is Jean-Mark!” And it's like, no, that's not going to work. Right? You need to sound American. Get an American narrator, you won't have that problem.”
Finally, he pointed to the importance of sales and marketing.
“In Europe they like to poo-poo sales and marketing. They say “we win on best product!” So there's a strong ethos that the best product wins and that sales and marketing is not something worthy of investing in. In the US you have to rewire it because Americans love sales and marketing and we like to buy from the market leader. We're just like “hey, maybe they don't have the best product but we’ll buy because they're the market leader.” You might have the best product. You know, that's great. Good for you. But you're going to get thumped because I don't perceive you as leading in the market.”
Partnership models?
The audience asked Dave for his thoughts on whether a partner sales model can work for international expansion and how to best deploy it. Dave shared that in principle he’s a fan of the channel, though with two pieces of advice.
First, don’t use partners to do work you don’t know how to do.
“I'm going to tell you the story, there's an old TV commercial in America where there's two older brothers and a little brother and mom buys new cereal and the brothers don't want to eat the cereal. They're like, this is gross. I don't want to eat this. So they force the little brother to eat it. They say, “we'll make Mikey eat it.” And they shove the bowl over to Mikey. And Mikey eats it and he likes it. And he says, well, “Mikey likes it.”
And this is sometimes what companies do with partners. They don't want to eat it, so they're going to try and make a partner do it. And if it's your little brother at the breakfast table, you can force him. But in real life you can't. Don't ask somebody to do something you don't know how to do and/or don’t want to do yourself. So as long as you actually know how to sell it and you could train them and they can be successful, do it.”
Second, be deliberate about which markets you leave for partners to focus on.
“I would do it in the secondary markets. If I was a US company opening Europe, I would do UK, France, and Germany directly myself. And then I would build an alliances team, or a channels team, an international distribution channels team for Spain, Italy, Austria, maybe Nordic countries. One team that supports all those channel distributors in each of those countries.
Because as it turns out, supporting a partner in Brazil is pretty much the same as supporting a partner in Austria which is pretty much the same as supporting a partner in Italy. The core skill we want you to have is supporting partners driving deals. And that skill doesn't vary with geography.”