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Chris Walker
You're listening to Revenue Vitals with Chris Walker. What's up, everyone? Welcome back. I wasn't sure how many people were going to show up today since we've been out of this. I think for as long as I've been doing podcasts, which is coming up on a fifth year anniversary soon, that that was the longest time that I've ever gone without doing a podcast, which was close to a month, for those of you that don't know. At the beginning of November, I ended up with strep throat, which I hadn't had since I was 14 years old. And it was the worst illness that I've had as an adult. It was debilitating for at least a week, but then I got some antibiotics and figured out what it was and I was good to go. And I think sometimes the world, whether it's a sickness or something else, kind of just pumps the brakes on you a little bit, like, hey, let's slow down, buddy. And helps some things get more clear. And ever since I've gotten better, things are just rocking and rolling. So if you're feeling sick or you're feeling slow, just know that it's just a matter of time before the slowness stops and you start rolling. I went to Mexico. I spent some time in Tulum last week. I forgot over time how, especially as an entrepreneur or a strategist, when your job is to make a small amount of really important decisions. Very well, there's some people that have that job and other people that don't. But if you have that job, how much that I found that taking a vacation, spending $5,000, $10,000 to go somewhere, whether it's solo or with people, to get your brain out of your home and your work. And to that it becomes super ROI positive. If you have to decide how I'm going to spend $20 million next year, $10,000 to refresh your brain and make good decisions is totally insignificant. So that's just a little bit. And that can, I think, apply to anybody because it sparks creativity and new connections and things like that. So just especially of the holidays coming up, just encouraging people to really check out and get that. Give your brain that time to put things together. It's been really working for me. So much so that I think that I'll just have a standing with it over at least every eight weeks. I need to go somewhere and do a little retreat because it's been so helpful for me. Cool. Continuing to move on with some more quick administrative things. We have three more episodes this so ensuring that I have my health for the next three weeks. We'll be back here today, the 10th, right? And then the 17th and then we'll be off breaking. And I think we're going to come back the second week of January. I don't know all the details, but I do know that the format of this event will change at the beginning of 2025. So stay tuned for further details as I figure it out. But I'm going to sort of talk you through where it's at. So there's a lot of different dynamics happening in the market that are really important for entrepreneurs and business leaders. There is this wave that's happening with AI that I didn't appreciate fully until recently. And then I'm like, holy fuck. Like this changes everything. I'll never build a business the same ever again. Ever again. The people that do the grunt work, the hand work, ops people, paid media people, low level designers and copywriters that people use for offshoring right now, many of those jobs will go away to AI because AI will do them faster, better in 24 hours a day. It'll happen at some point. Just like people used to push these things around the farms and then they had the tractor, the same thing will happen. And it doesn't mean that as a performance marketer or as a designer that you're going out of, that you're out of business, that you're out of a job. There are still a lot of farmers that just figured out how to use the tractor. If you're in one of those jobs, you need to figure out how to be the best operator of AI to do your job a trillion times better. Because you can get a hundred X. The way that people build companies on headcount will never be the same. We're going to see more, less than 10 person marketing teams at a hundred million than we do 50 to 100 person marketing teams. Not tomorrow, but it'll happen. And the people that have 10 people marketing teams will use AI very well and have a fuckload more money for programs and doing the great stuff for customers and not have that all tied up in fixed cost, headcount salaries, benefits, politics, meetings, reporting, all that stuff. So it's, it's already happening. And I think that's something that's really important to be aware of with that. There are a couple of things that people and I've been talking about this for years, but it's really coming on strong that people really need to be aware of. The first one is that free Advice that you get on places like LinkedIn or in a community or things like that aren't actually free, they cost you a ton of time. When you take that advice, it infiltrates your brain. You spread it around the company and it's not applicable to your situation. And 90% of the advice that I see on LinkedIn today, including some of the stuff that I have said before or currently say, is positioned as blanket advice and is anything but that. I'll give you a couple of examples. Yesterday I saw one from some people that work at HubSpot that said that in the future distribution's all that matters, AI is going to change product and blah blah, blah, blah, blah, blah, blah. The only thing that matters is can you have organic distribution? And I was like, yeah, maybe that matters if your TAM is a hundred thousand accounts, but if you're selling to the top 500 publicly traded companies, distribution, organic distribution doesn't help you very much. It costs $10,000 to advertise to all of those accounts all the time. It's not an advantage in distribution when your TAM is small. And so just be careful when you and then other companies saying we're killing the SDR role. Well, yeah, if you're a 4K ACV company and you built that model, that model does not work. You cannot achieve CAC when you have marketing dollars, marketing headcount, SDRs and salespeople all involved to sell a $4,000 a year product unless you have 150, 200% NRR, which nobody does. And so yeah, you need to squeeze out the SDR. But what if you sell 250k SaaS and your SDR role is actually working and it doesn't have to be super high volume. Don't take the advice that's blanketed on LinkedIn. It's not free. It costs you a lot in mistakes. So what's really important is finding somebody that can contextualize and apply this information to your exact situation. It doesn't need to be me. There are other people that can do similar things. But what I've started to learn is that you need someone that's outside of your company that you trust. And sometimes a good PE firm will sub this in as like a value creation team, but many do not offer it or at least don't have full capabilities. And you need somebody from the outside advisor, value creation team, management consultancy, something like that, to contextualize the information and help you make the small amount of really important decisions. Right? So that's one thing. And then secondly to that I built my first company, or at least a big driver. To me, building my first company was public free thought leadership content where oftentimes I told people exactly what to do. I would show screen shares of the stuff that I shared. I would use terminology and language and things like that. And what did I learn over the past five years? That yeah, it helped me build my first company, but I will never build another company like that. And that's advice that was going to throw people for a loop right now. And here's the downside of what I did at my company is that throughout the time there were many people that copied my. They trademarked my ideas and my words. They took the things that I was saying in my screen shares and made it into their product. They would build the things that I was talking about. And now with AI, they can go in there and grab a screenshot of what I'm sharing and build the product in three fucking minutes. And so, and this is for everybody out there, that the way that you think about your IP through content should fundamentally change. The only real moats that you have today are a deep, deep connection with your customer. The ability to drive a tangible, measurable, real business result consistently, and the IP and processes in automation that drive that result. And having some level of distribution to your customer when your TAM is appropriate. Another connection being closely connected with your customer. Those are the only moats left. Whether you have two developers or 30 developers isn't an advantage anymore. Whether you have 50 marketers and 10 million in budget or five marketers and 5 million in budget, it's not an advantage anymore. I truly believe that. I analyze all the data. Companies that have big budgets doesn't mean they perform better. It's usually the inverse. The bigger the budget, the worse the performance. And so with that, I am forced to change the strategy of this event. Where a lot of the advice that has previously been free into the public beginning in 25 no longer will be because there are people coming in, there are people pretending to take demos with me that want to copy my product and take a screenshot as I show it them. And I'm just not going to allow it this time. And so that unfortunate for some people that show up and get a ton of value from this. I'm going to still produce the podcast, but it's going to be a lot more geared to being an entrepreneur, finance and how to get rich, which I think is something that I have a real perspective on, that can help people, but it will shift away from nuts and bolts. Rev Ops data, tactical marketing and things like that. And I know that when I make this change that some people in this audience will not come with me. And I understand that. And I know and I, and I think that other people that when I make the change will be excited and ready to learn something new and will come along with the journey, even though it's a little bit different than what they're used to getting from me. But I need to do this for me that my the way that I look at business and the way that I look at how I can make an impact on this industry has changed. I've left my mark on marketing. I have most people use all of the ideas that I've formalized and created over the past five years, which I'm super proud of. And now when I look at the actual situation today and we'll just get to the next point is that I am positive at this point now because when I've had maybe 10 conversations with CMOs and marketing teams in the past 60 days and this conversation is the same, which is we're ready to do the dark funnel. We want to create demand or we want to build brand, which are all semantics to basically the same thing. And I tell them very clearly, if you do this, then what's going to happen, because I've seen this story hundreds of times, is that you're going to make these changes. You are not going to properly measure the baseline data that you need to prove that it has ROI when you don't have trackable touch points. In six months or less, the CFO will come to you and say, what is the impact of this investment? You did not set it up to be successful and you will fail and the investment will get cut and you'll go back to doing the same dumb shit you were doing before. And so if you want to set up this strategic transformation that happens through marketing dollars but actually impacts the whole go to market, the only person who can fix it is your cfo. I'm positive Rev Ops tries, can't do it. Marketing tries 99% of the time. They can't do it. They can make a lot of progress, but eventually it will stop when the CRO also cannot do it. Because you need to be able to see the whole budget, the $50 million budget spent on all of go to market, not the 12 that go to marketing. Because the investments that fix these problems are in the cracks between the departments that no department leader is going to put their money to because they their it's not their money is gets evaluated based on marketing KPIs the marketing budget does. What does that mean? We need an excess allocation of resources for cross functional projects that drive the fucking transformational growth in our company. Who's investing the money to know that our go to market is fully set up and ready for AI in the next 18 months? We have point solutions where we're playing around with AI for outbound. But how does our go to market run on it? How do we have like AI operators that do the jobs that right now we offshore and how do we have that do them better, faster, 24 7, all these different things and I don't want to discredit the progress that can be made in each individual department because it is important. But if you want to make a full change where you adopt the strategy that I've been talking about and you do not change the mindset around how finance builds the the go to market planning model and the mindset around how finance scrutinizes your budget, which by the way is overly simplistic, incredibly limited and not just limited to marketing, it's also overly simplistic and ineffective for SDRs. Sales is more straightforward. But a lot of the times it looks like sales is not doing a good job because PRP is low or quota attainment is low. And it's almost always a pipeline problem driven by low marketing and SDR roi. And so if as a marketing leader you're serious about this and you actually want it to be successful, hiring the best performance marketer in the whole world and having them on your team will not fix it. Hiring the best agency in the world to run your media will not fix it. Having the best partnership with the biggest influencer in the world that your customer trusts unlikely to fix it either. Because at some point those investments will get scrutinized. The measurement system you have in place will not measure them and you haven't set the business KPIs to show that even though we don't have a touch point on this, we're getting more pipeline, higher win rates at a lower cost and that's what we need to be shifting to when it comes to marketing. So just a word of caution there. I know a lot of people are thinking about strategy for next year and I imagine that any logical CMO is thinking about this, if not already doing it. And I think it's just important to know and then once you're past that, like if you're a sophisticated cmo, that at some point the thing that will hold back your ability to hit pipeline targets is actually the prospecting machine, not advertising, events, content, thought leadership. It's the prospecting machine. And when you start looking at it all together and not saying marketing sourced versus outbound and you look at it as how much pipeline did we create as a machine in business where most of the investments to create pipeline come from my budget as a CMO and I need alignment with the prospecting team because I don't get pipeline if they don't call the right people, send the right message, get the meeting, have the right process, hold the meeting. It's a qualified account. All that stuff has to go right. That is outside of a CMOS purview, typically for them to hit their goal. And so at some point that will be the thing that holds you back. And that is a data problem that likely only can be solved by finance through rev ops or likely an external firm that knows how to do it because most internal rev ops teams will not know how to do it. I got one more point here and then I, and then I do want to get back into the normal format of Q and A. I think this might be an interesting different way to set the tables, that the discussion that we have together afterwards might be a little bit different in terms of topics. But I think that they're. And it's not just me, actually someone else told me this and it took me a little while to buy into it and now I buy into it too. So I'm not going to take credit for making this up. There is a revolution happening in SaaS right now. The combination of AI for product and AI for go to looming, AI for go to market, AI for product is real. And here I played with it on Sunday for six hours. It's insane. You can build something in two days that used to take three or six months and the same thing will happen and go to market as it gets more sophisticated. Why isn't it working in go to market right now or why isn't it living up to the promise the same way it does in product? Because the data architecture between finance and CRM is totally broken and AI can't sift through it. Your humans can't even sift through it. Have 50 people look at your CRM data and finance data and you'll get 50 different answers, especially when they come from mid level managers and people. And so if humans can't come to the same conclusion around the data, how is AI going to give you the right answer? There's 50 answers. Which one are they going to pick? Probably not the one that's right. Maybe all 50 are wrong. Maybe we're not collecting the right stuff. And so if you want your go to market to run on AI in the future, you need a sound, systematic, proven data architecture that someone that a robot can figure out what to do with. Like a code. Like code. That's why it's farther ahead in product than it is in go to market and probably why it will be farther ahead in direct to consumer E Comm than it will in B2B. Because direct to consumer e com data is a lot more clear than the B2B that has the sales layer and the manual data processes. And so there's a revolution going on where you can literally like asana a CRM, something like that, you can copy the whole product, sell it for 10% of the price or remarket it to a niche. It's an entrepreneur's dream. And so there's that element happening. There's an element right now where if you see the pricing model changes that used to happen by seat and now you can see some people pushing it by results, but the result is really the completion of a task. So like AI agents being $2 per ticket closed or $0.50 per website search or something like that, it's per task or action completed, which is a great usage based pricing model by the way and can be connected to the result. But over time we will move all the way to the end where you get incentivized and you have a usage based model based on delivering the actual result that you promised to your customer. And so if you have an ABM platform that's saying we'll help you grow 10% faster, then they should put their money with their mouth where their mouth is and they should make a million bucks. If they help a company grow 10% faster and they should make zero if the company doesn't grow where right now they just make a quarter million dollars either way. And so there's another thing that's going to continue to push pricing models to getting the customer the actual result. Result a results oriented pricing model which is the most fair and the most aligned interests out there. SaaS companies aren't used to it, institutional capital is not used to it. So that's something that we'll have to adjust. But bootstrap companies have total availability and early stage companies have total availability. And the main point that I want to make here is that I truly believe in my heart that if you look out over the Next, let's say seven years and you take two companies, you have one company that's five people and you have another company that's 100 million in revenue and they're competing for the same share. And you look at the company dynamics differently. The five, the five person company is bootstrapped. They get forced to build AI native into their product in their company where they don't need to scale headcount, especially in sales and marketing or product. The same way a SaaS company does that they are so close to their customer and they're driven to the result that they build a professional services arm and engine that almost guarantees their customer gets the result. They get a much better pricing model and margin and their NRR goes up. And then you have the $100 million SaaS company that AI is a bell and a whistle in their product and it's a little bolt on this so they can say they have AI, their cap table is totally underwater. That if they sold the company today literally nobody would make money except for the investors would have a negative return but would get some money back. That they have all this different pressure that they're not going to figure out how to build a professional, professional services arm that actually helps get the customer the result. Because in the process they would cannibalize their ARR and slow down their revenue growth which investors will never allow. AI would also likely cannibalize their existing business model. And so if you take those two companies today, I would rather be the five person bootstrap company. And I think that you'll have a better chance at winning. And so that should be empowering to early stage entrepreneurs and people like that. Because it's true that you do have a distinct advantage in these couple areas and all the stuff that's happening right now levels the playing field that raising $10 million isn't an advantage like it used to be, that having 30 engineers isn't as valuable as it used to be. And for the $100 million companies and the people that work in them, I think it should be a warning sign not to leave the company but to be aware of who's coming to eat your lunch and what they're thinking and what they're doing. While most I watch a hundred million dollar companies sit in meetings all day and do nothing, make decks and change nothing and we need to do stuff differently or people are going to come and eat our market share away and it's going to happen fast. I know companies that are at 250 million ARR, that are going backwards, that are declining, which. And then if you're on top of that, you're burning 100 mil a year, which many of them are. You could argue the company's worthless. It's just insane. And so that was three, four weeks of built up sort of things that I've been thinking. I hope that some of you appreciate the shift in topics. I think that these are actually, if I'm just telling you as a marketer, sdr, marketing leader, anybody, these topics are more valuable to you even, even if you may feel like they're not relevant to you today. Because the way to be the best marketing manager in the world, in the company, whatever you're trying to do, is to think like the CEO and deploy that thinking to your job anywhere across the organization. And when you do that, you think two or three levels higher than the job that you're in. If you're the cmo, you should be thinking, what does the board think about this? How is the board measuring my performance? You should be thinking multiple levels above the organization than you are at. And that's what I'm trying to help you do. So hope some of you appreciate that. And let's get into some questions. It'll be fun.
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Carolyn
All right, we've got some good discussion in the chat around one of the things you were talking about. So Chris, you had mentioned that companies should be taking objective third party outside advice. Some folks feeling like, you know, there may be roles internally that can do this, but why specifically somebody external to the company versus somebody who's, you know, like really immersed, has the institutional knowledge, like for example, chief operating officer or chief of staff or somebody like that. What's your perspective on that?
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Chris Walker
So when you're playing at a high level, right? So if you think about not being blanket advice, like this advice is worth it when you are trying to play at a very high level and not a 2 million ARR company, right? So maybe think 20 million, 50 million, 200 million, that the person that makes that decision oversees 50 or $100 million every year. And that 50 or 100 million is expected to deliver a return by the board just if they were managing a stock portfolio. And so the decisions that they make around how to allocate those things are incredibly important and make differences in tens, hundreds of millions or billions of dollars for shareholders and investors. And so this is not asking somebody, how do I make my Google Ads 5% better? This is saying, what are the three things that we could do this year? That if one of them hit, we'd go from 20 million to 100 million in the next three years that just wash, rinse, repeat the same strategy at 20 million, and adding more money to all those things that we do incrementally is a guarantee for diminishing returns and slow growth and higher cac. And so that's, that's what's at stake here. And when you think about it that way, there are particular things that not everybody external has, but smart strategic people outside have specific things that nobody in your company has if they're set up the right way. I'll talk from my perspective. Okay. I have calculated and seen SaaS data from more than 100 B2B SaaS companies calculated in the same way. I have the metrics, I have the benchmarks, I have the scales. I know exact performance on 50 or 100 metrics all the way from growth rate and go to market efficiency all the way down to the conversion rate from a meeting to a qualified opportunity. I see all of that data and I have an understanding which allows me to be able to quickly see where are the places that you're doing really good and where are the places where you're really not doing good. And nobody in your company has that perspective. They just know how are we doing relative to the arbitrary goals that we set at the executive level that the board decided. And if I try to compare, if the COO goes and meets with their buddy that's a COO of a different company, and try to compare their CRM data and their finance data and unit economics and marketing performance from one to another, they will 100% fail. I've been doing this for more than two years, and I just feel in the past three months that I've been able to figure it out. I've been working on it for two years. We've been building a product for 15 months that automates it. Your COO is not going to figure it out. Secondarily, there's a huge level of politics that is not just between the CMO and the CRO, but there's politics all across the company that slows down decision making and prevents transformational change that someone on the outside can clearly see and call out, because they don't. They're not at risk of getting fired, so they can actually tell you the fucking truth, which is what I did to a CFO this morning. I said, you don't pay me to tell you what you want to hear. I'm here to tell you what you need to hear. So this is what it is, and I think that you need to do it. And I know you're not going to be happy about it. Nobody at the companies has a political place to say those things or rarely do. So those things never get talked about and never get brought up. Third is that somebody from the outside has likely solved this problem with companies. At least if you're hiring somebody good with 25, 50, 100, a thousand companies already, how much more do they know than your COO about solving this specific problem? It could be infinite. It literally could be. And so what people have, what, what's, what most tech companies have thought about for external people is how do we replace a headcount, how do we get somebody that we just don't want to hire, so we'll just find somebody to freelance for us or do something like that. The real reason you bring in external talent or external consultants or external tools and technology is because they built something that you can't build on your own or you choose not to build it because buying it is a much better decision. And so I think that when the stakes are really high and you have five people that have five different opinions that are using a data model that every company that drives their strategy, it's based on their opinions of people. Because the data is not set up in a way that everyone in the company could look at it and come to the same strategy because they don't collect it the right way. So it becomes the opinion of the CFO versus the CMO versus this person versus this person. And then when you think about it like having someone on the outside, let's say for us, right, like our entry level is like 20,000 per month, right? So 240k a year. Our average customer is probably spending $50 million a year on sales and marketing. So our line Item is a 0.5%, 1/200 of the entire budget. And I am positive that we provide a better ROI than any other line item in the entire budget, guaranteed. And so that's just a perspective. And then if you're an external vendor, a consultant trying to get off the ground or something like that, you should re listen to that clip and say, how do I design my business around that? Because if you just say you could hire a marketing ops director, but you could just hire me instead and I'll do the work that you say it's going to be hard to be successful in scale. You need to be bringing something to the company that they can't have because their position in the organization and their full time nature of their job means that they're not out solving the problem. With 100 customers, they're not collecting the data with hundreds of companies, they're not researching the problem, seeing how other people are fixing it and things like that, at least at the same level. And so it's kind of like there's probably a good comp for it in construction, but I, I don't have one right now.
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Carolyn
All right, so on a little bit of a different note, I think some people are interested about where the future direction of Pasetto is going. Chris. So I'm going to bring on Jamie, who has a question for you.
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Jamie
Thanks, Carolyn And Chris, we appreciate all the stuff you've been doing. You know, I've joined in the last, you know, six months and it's been very, very positive for me. It's given me a lot of validation of certain things that I've been working on. And so, you know, it's sad to see things will change, but I'm interested to see how it's going to change, maybe for the better. That being said, you know, there's going to be a lot of movement towards fractional CMOs and go to market folks. I know I'm positioning myself more and go to market versus just strictly CMO because I've been in all the different go to market roles. I've been in success and had a lot of acceleration there and product marketing. But what you've been working on, I'm really curious and I haven't seen it yet, but I haven't imagined that. It's a lot of directional things and ongoing monitoring of how your go to market process is working. And I'm curious if you are going to use that as a leader towards Refine Labs or keep it open for the public and other firms that might want to sell this as a tool for their clients to use. So I'm interested to see what that's going to be like.
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Chris Walker
Yeah. So I believe that there are two fundamental issues in a majority of SaaS companies that hold back growth and ROI. Number one is how they structure staff and organize their Rev Ops team. And number two is the financial planning model and how they scrutinize roi. Those two things. And so when you look at it, the desire of what people want out of Rev Ops is fundamentally impossible with the people that they choose from it, how it gets organized. Nobody can do the whole scope. Right. I'm not going to be the plumber in there integrating the technology tool, but I can be great at figuring out how we're going to allocate our $50 million investments and the Person that's in there playing with the technology tool isn't going to help the CFO allocate the 50 million. But right now we jam that into one function and call it rev Ops and call it a day. And so the real way that it should be organized is I think that organized around the factory is a better structure than calling it marketing, sales and SDRs. You have part of the factory that's called create Pipeline. Maybe the CMO owns it. Maybe you take a like a VP of revenue marketing and put them in charge of IT and the CMOs in charge of the art and the brand stuff. Right? So but you have something that's in charge of creating pipeline and then you have something that's closing new logos, which is typically going to be the CRO. And so you have that. And then you have an operations function that wraps around creating pipeline, which many people would call Marketing ops right now. But marketing Ops needs to extend all the way through prospecting to the end to qualified opportunity, which right now it doesn't really. And then you have what people call rev ops today that wraps around sales and really should be called sales Ops. And you have that. And then you have customer success account management and you have an operations function that wraps around that. Those three operations functions are responsible for running the factory. We run and continuously improve the set processes, technologies and data. Those people are responsible for running and operating the factory. Think comp plans, ad hoc report, campaign tracking, territory planning, sales enablement, whatever stuff that sits within the departments. And then you need a big wrapping around it called go to market operations that connects all those things together and feeds the CFO the information they need to deploy all the investments and make good decisions. And so the way that operations has been structured, it's all been one or the other. It can't be in marketing Ops if it also needs to be rev ops. I don't believe, I don't buy into that theory, actually. I think that you should have operations resources that run creating pipeline, marketing and prospecting. You should have operations resources that specifically run the sales process. You should have specific operations resources that run customer success and account management. And then you need a different function that thinks higher level that looks at the whole factory together with a new data layer and brings it to the CFO and helps to make decisions. And it separates the tactical incremental improvements from the strategic transformational improvements and changes, which is really what's necessary right now. Every B2B company is stuck in incremental nonsense. What's the decision? How do we decide what we do for next year. Take the budget from last year and add 30% to everything. Take the budget, what do we get? 10% more budget. Let's just take 10% and we'll put it on one bet and call it Connected TV or we'll just spread it out across the stuff that we already do. And it's because of how the operations and the Data and the KPIs, they facilitate incrementalism. And so if I'm thinking about where my place where I add a lot of value, I think you have to decide whether am I going to help go to market leaders run their part of the factory or am I going to help CFOs design and optimize the factory. And if you're helping CFOs you better be great at FP&A, you better understand go to market, you better understand what the balance sheet is and how that all works. You better understand how to calculate EV and things. So it's making the choice about where to go. I think there's places in both of them, I think they're both super valuable. I think that it's generally a mistake for CFOs and CEOs to think that the Chief Revenue officer and the CMO or the people that are going to optimize their part of the factory or fix the factory. Because if you look at a factory, that's not how it happens. The department leaders that run part of the factory are not responsible for fixing the factory. Someone else's job, cfo, coo, the lean manufacturing team, the people that are accountable to those types of metrics. And so for some reason we hope that our paid media manager and our CMO and the people that work in the factory are also going to fix the factory. And generally that doesn't happen because short term prevails over long term, tactical prevails over strategic and you get stuck doing the same stuff. And so you need somebody outside of the machine. External, I believe is the best case to be able to help executives fix. Figure this out and then feel free to answer a follow up because maybe you wanted something a lot more specific about your situation and I'd be happy to help.
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Jamie
No, it was just more, there was a lot of that great. But the biggest thing is when you officially launched Pasetta, which I think you've, you've done in parts, are you going to make it available for sell by other agencies other than Pasetta directly or refine?
- [34:00]
Chris Walker
So I'm deeply considering other models that could be more like Like a franchise model that I think for fractional go to market strategists, they could do it on their own with no tools and make it up themselves. Right. And they could probably be successful. But could they be a lot more successful building a seven person franchise of Paseto that leverages the technology, data benchmarks and things like that to be able to build a higher performing offer for their customer set? I think that's interesting. I think that's innovative as well. So I don't, I don't know for sure, but I've definitely been toying around with it.
- [34:35]
Carolyn
Awesome. Okay, well, we're going to go to our next question. We've got a good one here from Finn, so I'm going to bring Finn on to ask the question.
- [34:43]
Finn
Hey, Chris.
- [34:44]
Chris Walker
Hey.
- [34:45]
Finn
First off, appreciate you releasing that coffee conversation episode on your podcast. That was really helpful for me.
- [34:50]
Chris Walker
Dope. Yeah, I had a lot of fun doing that. I want to do more situations like that because I think they're just like in that setting. It's kind of like the behind closed doors talk and you talk about things that are personal and more in detail and it just stretches me in other ways. So. Yeah, I'm glad you liked it. It was fun for me too. Yeah.
- [35:05]
Finn
Well, sign me up if there's a sign up sheet somewhere.
- [35:08]
Chris Walker
Cool. Coming to Austin. We'll do it.
- [35:10]
Finn
Right on. Hey, I wanted to get your take on how CEOs and CFOs that you're talking with are thinking about go to market efficiency post election. There's obviously like a ton of conflicting factors at play, but what's the energy leaning towards in your conversations?
- [35:26]
Chris Walker
I think the general sentiment is that it's going to be better than 2024, but not like it was in 2021. Like, I think that that's a general sentiment that people feel. Are people still lowering costs because the way that their company is valued and things like that? Yeah, some companies are having the budget stay the same or lowering the go to market budget even further still now because they need to have a certain set of go to market efficiency, which then leads to EBITDA on the bottom line and stuff like that. And so you need to continue to change your investments based on business performance. But when you think about 2025 will be the first year in a while that most people feel like they at least have some wind at their back and no wind in their face anymore. And I said it, I could go back to the podcast. It was probably in January of this year And I said 2024 is going to be a setup year. You're setting up all the things that you need so that once this stuff turns over, interest rates change. Whatever happens with the election is what it is. I really don't have any interest in getting into that part of it that if you're set up properly, which in hindsight set up properly was great gross margins, high nrr, high customer results, and you at least are educated around the capabilities of AI and hopefully have put some of them either into your product or your company, if you are set up properly, then 2025 will be a great year for you. If you have your head in the sand or made some mistakes with how you raised money two years ago and are still feeling the pain of that, and like your whole executive team knows that this is a. It's hopeless, then you're in a different place. But I think generally for people that are set up properly, 2025 will be a good year and you'll see similar to slightly increasing growth rates, great growth rates for some winners, which is like. It's like that in every economy. There's always winners, always big winners. So that's like, at a high level how I, how I see it.
- [37:14]
Finn
Do you think there's, like, the enticement of what's probably going to be a lower corporate tax rate that's incoming in the next 18 months, maybe lower interest rates? You think that's going to, like, force executives, or maybe enticing executives to put GTM efficiency on the back burner to, like, take advantage of this window? Or do you think the stuff that you've been championing is pretty baked in? The lessons from the last two years are, like, too painful to overlook.
- [37:39]
Chris Walker
It's a very astute question. Thank you. When you look at the discrepancy between what a public SaaS company valuation would be, right? So we're talking 6 to 20x. Maybe you're at 25 if you're the best fucking SaaS company in the world. But a lot of people at 32356 x revenue, there was a huge company that got bought for 4x revenue, right? So that's what they're getting in the public market. So if you ipo, you'd likely expect something like that. You're not going to get a hundred x, right? But when you look in the private markets, the valuation multiples are 20 to 100x still. So there's this big dissonance between what the public markets are investing in versus what the private markets pay for and all that does is change the return profile for the investor where when you pay that premium in the private market you're like, let's say your PE you invested 150 or 200 mil and you want to exit 500 with an IPO or something like that, that you have to 10x ARR to get a 3x return. Who the fuck wants to invest in a company at 100 million, grow it to a billion and make 3x return on their investment. You want 100, you want 100x if you knock that out of the park like that. So the valuation multiples in private companies are still remain super inflated. And I don't know how it hasn't adjusted. I got offered to invest in a company last night at 36x revenue. They barely have any revenue. Why would I pay 36x? I know that it's on a convertible note, but the max at 36 like for a company that's losing money, probably doesn't have a lot of money in the bank and has a couple million in ARR. It's like any logical investor would be like I'm going to put my money somewhere else. So I just think that the private SaaS investing market has to change because as an asset class and it's not it, it will take a little while, right? So if you, let's say you invested in a VC fund in 2020, arguably the worst time to ever put money into a venture capital fund, right? So when they spend the next three years and the market's hot, so they deploy all those investments between that and 2022, so they're paying 50x revenue, right? And then all of a sudden that 50x is now 15. So just off the cut, their, their investments are down 66%. Maybe by the time the fund clears in seven years they'll grow revenue enough to break even. But like they're just having these unrealized losses sitting on the balance sheet that they don't actually realize the loss until they sell the asset or get out of the deal. And so they're just sitting there. Most VCs are totally underwater. They can't raise another fund. They don't have any money to Invest. They're collecting 2% management fees and on the balance sheet they're totally fucked. And they're going to just have to ride it out and hope that the company they have the winner that saves the day. And so as an. And then if you look at private equity investments like they face the same pressure on value if they over at any point, if you invest at a company that's overvalued and then the value goes down. You just dug yourself a huge hole. So, like all investors that invested during that time period dug themselves a huge hole, including myself in some investments right at this point now I've gotten out of the hole, but many people that dug a big hole for themselves might take three, six years to get out or might never get out. And so that discrepancy between what private companies are valued at and what you would get in a public market IPO with real investors, I think that is the biggest problem in software financing right now. That the gap is so large, that puts incredible pressure on the investor to get a massive, massive outcome and not even get that strong of a return. And so if, like I'm undereducated, I will say that. But at the moment, venture, and it has been this way since 2019, venture capital is my least favorite asset class that's available, at least the commonly accepted ones. And the reason is because you do not get cash flow in almost any of them, that the success rate is incredibly low and that the return profile, like, okay, maybe you get 22% from the average VC fund and you get 15% from private equity. The risk profile and all the stuff on the investment. I'd rather invest almost anywhere else than put 50 grand into an angel investment or a seed investment. And some people hit the Facebook and I might pass on the Facebook every once in a while, but in the meantime, I also pass on 999 losers.
- [41:56]
Carolyn
That was a great thought provoking question there, Finn. Thank you. Yeah, we've got two really good questions I'm hoping we can tackle before we wrap up. Chris. So I'm going to bring Danielle on next. Go ahead.
- [42:08]
Danielle
Hey, Chris, thank you first of all so much. Just been really fun following you and excited to hear about how to get rich.
- [42:15]
Chris Walker
Let's go.
- [42:18]
Danielle
My question was just like, where do we go from here? You know, you talked about, like, go more focus on GTM ops or with CFO side and influencing them. Like what? I feel like everybody's listening to the same things right now. What resources would you point us to to really like get ahead and really dive into some of these disciplines.
- [42:41]
Chris Walker
Yeah. So to be clear, not everybody needs to go to this direction. I'm just calling it out as a potential opportunity. But the CMO role isn't going away. The Chief Revenue Officer role isn't going away. The Director of Marketing ops role isn't going away. And so all the roles still exist. It just comes down. And the way that I like to look at it now, because work satisfaction to me really matters. It's like less about the money and more about who. The people that I'm working with, what projects am I working on? Who am I helping? Are they grateful for my help? Do they listen to my advice? Do they get the results? Like, it's not frustrating. It's not the right word, but I'll spend 100 hours making this company an incredible strategy, and then six months later, they've literally sitting on a shelf with dust on it, and they've literally done nothing with it. And I'm like, why, sure, I made 100 grand. I don't want that. You know, when I think about it now, I think a cool way to think about it is like, what is my superpower? And you could ask that to yourself too. And you probably have more than one what are my superpowers? And try to use that to map where you could help the company most. And so for me, my superpower is that not always, but when I, like, have it harnessed, I can look three years into the future and literally see what this company looks like when we're doing 50 million in revenue. We probably won't be at 50 million in three years, but I can see what it looks like. I can see it's a imaginary office because we're likely to be remote, but I can imagine the office and the type of people that we're working at and the customers that are in and what's. What's showing on the screens and what our data looks like and how many customers we have, how our offer works. I can just, like. I can picture and see it all. It's my superpower, and I can do that for my business. But I've learned that I can also do it for almost any business if I have the right data and information. And so, like, I'm putting myself in the seat where if I sit between the revenue leaders, the CMO are. Sorry, the revenue leaders on one side, the CFO and CEO on the other side, and then the revenue operations or go to market operations, team down. And I'm right in the middle of that. That that's my superpower, that I can map out for the next three years everything that they should do, where they should spend the money, how it should be organized, what are the dependencies, not just marketing. Marketing, SDRs, data architecture, process technology, AI. I can see it all. And so, like, I basically tried to design my job to write around exactly what I'm. What I do that many people can't. That adds the most value to the company. And so you could go through that same exercise with you. And I didn't know that was my superpower until I was 32 years old. And so that's something also that there's probably some stuff that you might not even recognize that is, like, the thing that you do that other people can't. Took me a long time to figure it out. And then with that, I know people that are just absolutely incredible at process and documentation and, like, getting all that stuff out and making sure that it's really clear and defined and specific. I could never do that, but every company needs it. I think it's fun to try to really design what would be my ideal job. And when you do it, try to think about the differentiation element of it, too. So it's like there's some strategy to it that not only combines what am I really good at, but also combined with a lot of other people don't. Can't do this for whatever reason. I think that's a fun exercise to do. But then inside of it, all of the marketing things still apply. Being a great seller still applies. How those roles work in five years versus now will inevitably change. I think it will be that you have to understand whatever the craft is. So product marketing or be the CTO or understand thought leadership and content might be one. Like, so you're the expert at that one thing, and then you literally just take that and you use offshoring external experts and AI and you don't even have a team anymore. And that's your team. And it's. Why do we need a bunch of W2 employees? They're actually the most expensive and often the least innovative, sadly. And it's not their fault. It's just. It's how they're positioned in the organization.
- [46:40]
Danielle
Thank you.
- [46:41]
Chris Walker
You're welcome.
- [46:42]
Nancy
Thanks.
- [46:43]
Carolyn
All right, we've got one last really good question from Nancy, who really wants to understand Chris, why the cfo? So I'm going to bring Nancy on to ask her question.
- [46:53]
Nancy
Hey, Chris. Haven't talked to you for a long time.
- [46:56]
Chris Walker
Good to see you again. Nancy. Love that you're here every week I try.
- [47:01]
Nancy
Okay, I'm going to make four statements and correct me where my understanding is a little bit off.
- [47:07]
Chris Walker
So, I mean, interrupt you or wait till you finish.
- [47:09]
Nancy
Interrupt me.
- [47:10]
Chris Walker
Okay, Sounds good. That'll be fun.
- [47:12]
Nancy
So I. First of all, I understand the concept of factory. CMO runs the marketing factory. CRO runs the sales factory. Got that? I understand you advocate at GTM team, Many people do, but almost always the advocate is for the CEO to be the head of the GTM team. Right. Where I'm starting to hear a little differentiation from you is you seem to be advocating for the CFO or maybe the coo. Are you saying they should be the head of the GTM function when this.
- [47:48]
Chris Walker
Not really. Okay now. So first off, in the factory, looking at it like you have the marketing part of the factory and then the sales part of the factory, I think is overly simplistic. Where. Where do SDRs fit in that? So it really should be demand creation, supply chain prospecting, qualified forecast 1. And you have the whole. And you have maybe there's parts of the team that own multiple parts of the process, but they should be leveled down to that granularity, which breaks down the department silos and rethinks how you not necessarily organize your company, but how you organize your investments. If your company is 10 million or 20 million, then you may not even have a true CFO. You might have a VP of Finance and the CEO will lead it. Once you start to reach some scale, 50 or 100 million, the CEO has a lot of other priorities and they're probably going to be the head of GTM and the head cheerleader. But the CFO needs to make the model understand how the investments work, get a proper ROI on the investments, communicate it back to the board like they actually fix everything. The CEO obviously cares, but the CEO at that level really has to delegate. And they have truly capable people. CFO of a $50 million company is a very capable person. They just don't understand go to market that well. So that's why I provide a lot of insight, because they can see in the finance data very clearly things are not going right, Things don't feel right. But I can't go into the CRM and look in the opportunities and understand and sift through and figure out where the investments are that aren't paying off and what I should do differently. So that's where I come in.
- [49:20]
Nancy
Okay. And where would the CEO be in that equation?
- [49:24]
Chris Walker
It really depends on how the company is organized and what the COO role actually means. If it's a cross between COO and finance, then there's some of those that happen sometimes is a chief of staff that manages strategic projects for the CEO. I just think sometimes at that level, the titles, it's just so dependent on the setup and the talent of the organization. Whoever is responsible for getting a return on the entire set of Sales, marketing and account management. All whoever is accountable to true go to market efficiency, which includes retention and account management, which can only be this head financial leader which some maybe has a title of CFO in some or COO at some companies that is the only person that can fix it because they when you ask a CMO, right, so imagine the CMO has a $10 million budget, but inside the 10 you actually don't have that. You doesn't have that much variable. 5 million is going to internal headcount. So that's locked up. They're already committed to $2 million in events next year. They need 20% for digital and they plan to have an agency. And all of a sudden that 10 million, she only has 300,000 discretionary that she can choose what to do with next year because everything else has been decided already. And then you go in and you say hey cmo, we have this big strategic project that's going to connect all of your data together so that you have six sales and marketing and STRs and all this data together and it's going to cost $500,000 and take six months. Zero out of a thousand CMOs would put their last 300,000 on that thing because it's not their budget's responsibility to fix that problem.
- [50:53]
Nancy
Okay.
- [50:54]
Chris Walker
And so every revenue leader is responsible for deploying the investments against their to fix their part of the factory against the KPIs that they're measured on. But they are not incentivized to leave their factory and go over to a different one and start making their investments to fix other people's problems. That's why the CFO or somebody that sits over them and is outside of the department structure is the only one that has the visibility and the investment management to be able to truly fix it.
- [51:21]
Nancy
And so your bottom line is therefore it is this CFO or the CEO, depending on the structure that you should approach for a third party agency like a posado to be part of it too.
- [51:36]
Chris Walker
Yeah, okay. Just like how like every Vista company, Vista is like the notorious for their value creation team. They have hundreds of people that go into companies that find the biggest opportunities, consult with CFOs, do financial modeling, create the value. They're the investor and then they go and create the value so they get a big return on their invest investment. It's a huge value add to companies. And the companies in the Vista portfolio don't need to hire McKinsey or PwC for a million bucks because they get that thing. But the companies that are outside of that that aren't invested by Vista, which are most of them at that level, they're going to hire McKinsey or PwC or Bain and they're going to pay them $1 million and they're going to get a lackluster strategy and they're probably going to have it sit on a shelf. So that's the market that I'm attacking and I'm also trying to bring it to. A $50 million company can't hire McKinsey. They don't have enough money. It's not accessible from a cost perspective.
- [52:25]
Nancy
Right.
- [52:26]
Chris Walker
But if you have AI and technology and a new business model, then, yeah, you can definitely offer that to lower market companies that don't get that right now and they have to try to do it on their own between the CFO and Rev ops and it is not usually not working. Okay, that's kind of, kind of what we're thinking.
- [52:42]
Nancy
Okay, that's helpful.
- [52:43]
Chris Walker
Awesome. Cool. Everyone, great to have you here, excited for the next couple of episodes. We'll be back here again next Tuesday. I'm going to try and continue to bring the heat. So new ideas, new thinking, stuff that challenges you. And then hopefully I'll have more details on what we're going to do moving forward. I'm obviously going to keep doing the podcast. I'm going to keep posting on LinkedIn. I get so much energy from these events. I'm like, I got to figure out a way to fit this in every once in a while so we can get together. So I'll figure that out before the end of the year and let you all know. Have a great rest of your week. Thanks, everyone. Bye.