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Chris Walker
You're listening to Revenue Vitals with Chris Walker. What's up everyone? Looks like at least the people here found the new link. I was missing that link. This is why we're a couple minutes late. So sorry for the delay. Hey, Tracy. Charlie. What's up? Garrett? What's up man? How you doing? Happy 2025. Hope things are going super well for you, man. I just did an interview recently and the guy had done a ton of research and did a little trip down memory lane and was talking about all of the Refine Labs employees that had gone on to do amazing things and had mentioned your name and some others and made me feel really good to know about all those people, including you and all the other people that were able to accelerate their career and learn a bunch of things and you know, hopefully live a improved life for yourself and your family. So all that stuff makes me super happy and kudos to you. Not everyone had the information and some people took action on it and made it happen, other people didn't. But that's cool because right now, today we sit in here and there is a new opportunity just like the demand gen wave in 2020-2022 and a lot of people change their career and their lives for their family. There is another big wave happening right now which is that the way that marketing and SDRs are combined to create pipeline and how that is all measured and the data around it, I don't really want to call it RevOps. I think that revops is actually should just get back to being calling sales ops and everyone should get a lot more clear about what it is. So right now I've been framing it as go to market optimization. So you have strat go to market strategy which is who are we targeting? What's the competitive intelligence? Who's our icp? What Persona? How are we going to price? Is it usage based, subscription based? Is it AI or is it a product? What markets are we going to go after? Verticals? You have your strategy, which is a lot of art, a lot of qualitative insights, a lot lot of intuition on top of that you have go to market optimization. Go to market optimization for a developed company, 10 million ARR or more. When things start to get complex and you have a lot of investments going on, you have different teams and accountabilities. How are we going to measure the success of these investments? What data do we need? How do we report to the board? How do we hold people accountable? How do we make our go to market more efficient? How do we combine Financial data with the go to market data in order to have true visibility into the performance and efficiency of our go to market. That is a whole different element which is a lot more science. And then you have go to market operations which wraps around the entire factory and builds the architecture and the data model and updates the processes and things like that. And then inside of that you have marketing ops and sales ops, not rev ops, sales ops and CS and AM ops that are responsible for optimizing and running the processes inside of those sub sub functions in the factory. And I wrote, I had a nice diagram. It's like written on a piece of paper. No one can read the words. But I did sort of draw out the. The revenue factory and what it looks like and I think how it should be structured. And again I never recommend companies change their org structure. I'm not here to do that. You all organize the way that you want. But when we sit at the table and we look at our analytics, we make strategic decisions. We can't look at it by department anymore. We can't. And almost every company still continues to do it. The reason is because the financial data is built around what department spent the money and that's how they decide how they're going to scrutinize it. And it's a massive flaw. Anyway, I digress. I didn't. That wasn't planned topics there but sometimes we just, you know, I'm just feeling it. And so coming out today with first off just want to welcome everyone. We have a new link so anyone that's listening to this afterwards you can go to passetto.com, click on Events. There's a new registration link if you want to attend live. I myself got a little confused and went to the old link and I hope that there's not people waiting over there. There's a new link here. I think 2025 is going to be a massive year for everyone. Obviously there was some slowdown in challenges. We had that big wave and then 2022 and 2023 were hard. I'm talking to entrepreneurs and pretty much everyone is like maybe some people had a good 2022 because they contracts and it took a little while to lag and then they really felt it in 23. But parts of 2022 and 2023 were hard. I went back and I looked at because I write a like a one page simple strategy for my companies every single January or December. And I went back and looked at what did I write about 2024 and crazy like pretty much Everything that I wrote about the metrics, how much revenue we're going to have, how much customers, how many they're going to pay us, how many team members we're going to have, how the product's going to develop and things like that, pretty much everything of those was like crazily spot on. But the first sentence that I wrote about 2024 was 2024 was the setup year. It was the transition from the grind and the hard nut stuff to where the momentum's coming back. And I don't know if you all, if you're all in business right now. I think you can feel it. There's a whole different energy coming into 2025. Both my companies, our pipeline's never been better, our retention rates have never been better. I'm sure a lot of people are feeling some of those impacts too. And I expect that it will continue to improve. And just even having the mindset that there's wind at your back and you have momentum just makes it going about things a lot easier. What I wrote about 2025 and I think a lot of people can take this. 2025 for me is the year of strategic advancement. I'm not trying to scale my business from a million to we did 1.2 million last year in collected revenue to 10 million this year. I'm actually not. It's the idea of strategic advancement and I want to spend a little bit of time talking about this because there's been some interesting patterns and trends and I'm talking to some people and sharing some thoughts, especially for product oriented early stage companies. But I think even later stage companies need to be aware of what's happening. They probably already are. I don't think I'm sharing things that people aren't aware of. With the evolution of AI, the amount of copycat products and how fast you can copycat someone is ridiculous right now. I know people that are good at dev, that are can launch a new Software app in 24 hours now could copy 80% of the features in Asana or Monday.com and launch a verticalized project management tool in 24 to 72 hours and take a little slice of that market. An entrepreneur's dream, something that's really happening. I'm positive that there are people that set up demos with my customers sales team, bring an AI recorder onto the thing, get a demo and use that AI recorder to copy their features. Here's what some people are doing because I've been talking to people. Adam Robinson is one that just talks about this. So I'll share that one first because I'm not sharing anything that's not public all of a sudden. His business that was once differentiated now is 37 competitors. They all use the same data source, they buy the data from the same place and all they do is have a different SaaS, UI and workflow strategy. Super commoditization of that market, but it'll happen in almost every market really fast. And I heard about a couple of of AI companies recently that are at 3 million 5 million in revenue and don't have a website and are basically permanently in stealth, or at least up until this point have been permanently in stealth mode. And they get their customers through networking, conversations, whatever type of outbound messaging they want to do and things like. And I think that's something that people should consider. I think that might be a smart strategy. But the point here is to be aware of how easy it is to copy things inside of your product and to be aware of it and have a strategy around it. That's why recently I haven't been sharing a lot of our intellectual property. To be honest. Like a lot of people come to this event because they want to know the how, they want to know how the sausage made. How can I do this myself? I don't share a lot of those things anymore because someone on this zoom might be asking that question and going to share it with somebody who's going to copy the product next week. Um, so just being transparent around the expectations, around how this, how this event works. There's this idea where you have like the traditional or the legacy SaaS products. We'll just stay in sales and marketing tech for right now. But that have been, you know, started their company in 2010-2015, went on the venture train, maybe they sold a private equity or they did a growth equity round. All of a sudden they're at 100 to 500 million in revenue, they have a huge customer base and now all of these AI products are eating a slice of what they got. And a lot of companies are saying, hey, I don't need that quarter million dollar a year ABM technology tool anymore. I'll use these five point solutions that each cost $1,000 a month and I'll replace this entire tool at 20% of the cost and I'll get better results, better impact at way less of a cost. I'll get month to month contracts instead of them forcing me into a two year contract. I don't have to worry about them increasing our price every year, blah blah blah. And so Account based marketing technology is one that's very obvious. You can, somebody showed me they were tracking the amount of insight tags or the for demand base and $0.06 and terminus you can track how many people have their script tagged on the site and you can look at that over time. And gosh, from 2023 those tools are getting a bunch of uninstalls of their script. So it's not a perfect revenue calculation, but it does show less people. It seems like less people are using the product right now. And even in our own experience we see a lot of companies just ripping it out. So that's something to think about as an early stage company because many early stage companies right now that I talk to the founders, all they're thinking about is I want to take 1% market share for one of those companies, I want to not copy, I want to take one of their features, make it better, go after their customer base and get that one feature and displace something like that. It's a great way to go from, you know, 0 to 10 million in revenue and then after that you're probably going have to iterate and innovate on your product and your market. But super interesting stuff going on right there. We're talking strategy right now and I love it. Another thing that sort of goes into that with the AI copycats and the AI dev, it's always been this way, but I just want to continue to reinforce the message. It's not about how fast you can dev or how many features you release. It's about building the right stuff based on market insights that solves the customer problem. And so you don't have to be the fastest dev, you don't have to release the most features, you don't have to release on a three day schedule or whatever. Some people are promoting that they do. You have to build the right stuff that solves the customer problem. But I think that a lot of the people that are either developed companies or in the copycat area and space just think that AI is good and the building a feature is the solution. But many of these tools don't actually solve a customer problem and that will be exposed really quickly. Cool. Okay, so we got some strategy and product stuff. Now let's transition to what I think what most people come here for. So I've been spending a lot of time, particularly recently thinking about how the message and the things that I've been working on and the things that I've been learning could really benefit the marketing department. And I shared a lot of my predictions on the podcast. And some of people might have heard the, the interview that I did recently and I shared it on LinkedIn as well. But I want to even go like even more further with some of these topics related to marketing and some of the things that I've learned. And so as we've mentioned many episodes ago, and when I talk on discovery calls, like I had one yesterday and people come in and they say, you know, we've been trying to figure out how to solve marketing measurement. And they're like, and what we're doing is we're, you know, we're looking at, you know, a multi touch attribution tool and we think that might be a good option. But we've also thinking about building a data warehouse and using that data warehouse and we can put, you know, chat GPT on top of it so people can like, you know, try and figure out based on our Power BI Dashboard and ChatGPT. And what I say back to every single one is there is no silver bullet to fix this problem. And the real problem is the process. And this process has many steps in the process. And the what is the process defined as? How do we get data, turn it into insights and then turn it into action at the executive level? That's the process. And so buying a multi touch attribution tool might improve a little part of that process, but it doesn't solve the process. And so there are multiple layers to this problem. There's a CRM layer that nobody thinks about or considers. If your CRM data sucks and you put seven different tools and integrate on them, the seven different tools are just using bad, incomplete data to try to do something for you and produce reports for you that are also bad and incomplete and even get worse. Many people try to start with the tactical solution. So it starts as tactical as you can get. Touchpoint data channels, campaigns, all this stuff at the bottom and they try and build it back up and then they get it back up and then you have a deck at the executive level and people at the board are like, what the fuck are we talking about here? Why are we talking about keywords and campaigns at an executive meeting? And so I think many people should consider rethinking that entire process from a tops down perspective instead of tactical up and start with growth rate and go to market efficiency. What we now have rebranded to cost of growth. Everyone has been asking for that, right? So go to market efficiency, right? Doesn't really make sense. Go to market efficiency is going up, but that's bad. The terminology was Wrong. David Spitz had coined that term and I'd been using it. But when you actually think about it, what is it measuring? It's measuring the cost of growth. And when the cost of growth goes up, that's bad. Just like cac, when CAC goes up, that's bad. And so start at those two numbers, which is basically a performance measurement and efficiency measurement. And then work slowly and methodically work your way down, which is the KPI stack that we've reviewed for a while. And so just the take home point here is don't think about that. There is one solution to fix this problem. Everyone thinks that way. I just need one tool. I just need, if I just get like a little bit better CRM data, it'll be fixed. It's not true. There are probably five steps in this process and there is technology and people and process that you need to fix across all the different layers. And I'm not trying to overwhelm people here. I'm trying to be honest because many people are going to in 2025 say this multi touch attribution tool or mixed modeling tool is going to solve this problem, this critical business problem for us. And they will be sadly disappointed at the end of H1 when they go back to their board and they look at their results and don't know what to do next. I think that and I mentioned this before, but to reinforce we need our marketing leadership to have clear visibility into unit economics. And if people have caught the one of the most recent episodes or what I posted on LinkedIn today about the portfolio, I want to spend a little bit more time on this. If you think about it as a marketing leader that I have a portfolio of investments and you actually look and you look at all the places that you spend money that hit your GL and marketing, you'll see that there are 50 minimum but likely hundreds of individual line items inside of your budget that where money gets spent. And so it's not like we just have a couple of things that we need to scrutinize. There is a lot of stuff and a lot of complexity. Many things that I think marketing leaders just assume, oh, we're in marketing, so we have to do that. And I would encourage us to get rid of that status quo and evaluate every single investment as if it as if it's not required or needed and just think about it with a blank slate. So you have all these different investments and you can look at how much of the pie each of these line items take. Number one is going to Be headcount for every, not every company, but most. If you break it down that way, yes, everyone will be. Headcount will be number one. After that is most likely certain advertising channels and certain event types. I've watched many companies promote how they're trying to shave, cut their tech stack and save money on the tech stack. In marketing, technology is 2%, 2 to 5% of the budget. Cutting a little bit of your marketing technology spend is not going to fix your problem. It's incremental at best. Maybe you're wasting more time with headcount trying to cut, you know, one tool and save 30k a year and it's actually a net negative. So just to think technology is actually not a big part of your marketing budget. Sure, maybe we should get rid of a tool that we're not using, but it will not solve this problem. Overall, you have the portfolio that you're looking at and then a big part of it, and I'm still trying to figure this out for myself, is about what is the point and the purpose of these things that we spend money on. And most people will say, oh, well, that's for brand and that's for demand. And I asked them every time, okay, well what does brand mean? And if you ask 100 people what brand means, you'll get 100 different answers. You ask people what demand gen means, you'll get 100 different answers. And so we need more granularity and specificity around what is the purpose of this investment. The most easy and obvious one, let's just call it out, is prospecting, right? Whether you use AI to do it, or A's or SDRs or BDRs or XDRs or whatever you call them, you have these people that are responsible for taking signals and converting signals into qualified opportunities that our sales team has sat meetings with and qualified accounts. And there's a layer right there. You invest a certain amount of money in it and you need to get a certain amount of revenue and pipeline back. And it becomes very straightforward. What is the purpose of these investments and what is the goal? Who cares whether the signal came from our marketing automation database or zoom info? Who cares? Did we get the meeting or not? How much did it cost? We want the underlying data to know which signals are good and which signals aren't. Which, by the way, 99.9% of companies don't have and don't track. But we do want that data so we can optimize headcount, potentially introduce automation or AI in the future. But at its Basic form, how much does it cost us to get these meetings? And that is one part of the factory and then there's four other parts of the factory that also add cost. So we need to be able to compress and understand what is the cost of that process. You have a signals element of the process, whether you use a Google Ad to get the signal. Other types of performance marketing, a technology or third party data provider like User Gems or six Sense or an ABM platform, or the trillion other copycats that are another, you know, tools that use the same data are coming out with how much does that cost and how much does it cost us to get a high quality signal that our prospecting team uses? And now you have two different things that you can measure in two different ways that have clear targets around how much it should cost and you basically replicate that for every single stage of the new logo process which then and I've had given this example before, but it really needs to get drilled home because many and I promoted this in 2021. So like I'm not talking down to anyone. We have an eight month CAC payback on our Google advertising spend. People and even me at the time were promoting that as a good thing, right? So an eight month CAC payback on the Google advertising spend. But then you have all the other advertising spend, the brand spend, the marketing headcount, the agency costs, the BDR cost, the data, the technology, the sales commissions, the rev ops, the sales, different types of tools and all of a sudden that 8 month CAC payback on Google Ads has now bloated to 60 months, 5 years to pay back the cost of a customer, which at this point means that your company is likely worthless. If you're above 25, 50 million ARR and you have that CAC payback, it's really bad. So about being able to measure each specific part of the process and being able to have a method to evaluate it. And I think that marketing measurement is just wildly overcomplicated today. And there's a way to just make it a lot more simple to say this is how much money we spend. These are the four major categories or objectives we spend it against. These are the outcomes within these four categories. Inside of the four categories, here's our best performers, here's our worst performers. We're going to cut these bad performers, we're going to move some to the higher performers. Here are the new things we're going to do on a blended perspective. We're creating enough pipeline for our sales team to have Appropriate quota coverage and hit our plan and hit our CAC targets. Boom. Two slides. QBR deck for the board. Done. Marketing's in a good spot. And when things go wrong, right now companies do not have the data to understand what to do about it. So all they can say is SDRs missed their target. They were supposed to get 44% of sourced revenue, but they only got 38. The SDRs suck. It's not marketing's fault. And that's what those are. Literally the conversation. I listened to the conversations. That's literally what's happening in a hundred million dollar company right now. Totally useless conversation and totally useless to try to play the blame game between two things that do two different, have two different objectives in the factory, which all root from like the siloed department nature of how people are doing it right now. And I think there's a ton of opportunity for marketing leadership right now to be able to bring in this information, to have like the financial data and acumen to tell a clear business story around the impact of marketing. And then I'll say another thing, I think that, and I'm seeing this trend happen in an accelerated rate right now. I think that whoever owns pipeline creation, CMOs often do. If you don't own the BDRs, you can, or the whoever does prospecting, if you don't own that part of it, you can't own pipeline creation. And so we've seen a lot more companies move whatever that function is called into the function that's responsible for pipeline creation, which could be, you know, the VP of demand gen up to the cmo because you need that to have full accountability over direct pipeline creation. And so CMOs that don't have that responsibility should be carefully thinking about that because at some point, whether it's now, next year, or sometime in the future, the lack of integration between the prospecting engine and the rest of the pipeline creation machine will be the reason you don't hit your target. So you need, you need that. And the way that you hit plan oftentimes is just making a much better integration between those two functions. But right now SDRs get paid more for an outbound meeting than an inbound meeting. So what do you think they're doing with all your demo requests? You spend a thousand dollars per demo request to get one for your advertising and all the different programs blended and then a BDR is not getting paid the same way. So they're going to recycle that demo request, wait 30 days to follow up so they can have it be Outbound so they make an extra hundred bucks stupid. That's not anybody's fault but the, the first team executives for creating that level of misalignment and the compensation structure. And all I'm trying to do here is illuminate these problems so that C level executives see it so they can fix them. These are easy to fix things. They are. And so with all that said, I just called out a couple of problems. I went in a bunch of different directions from product strategy copycatting. But the best part of this show, and we all know it, is when people start to get involved, share their perspective, ask questions, have discussion in the chat. So I am ready to transition to that part. So thank you all for being here and we're going to continue to evolve the event. I hope the people that have been here for a while appreciate some of the higher order business strategy, finance and product that I'm bringing in here. I think to be a complete C level executive, whether it's marketing or anywhere else, you need to have an appreciation understanding around all the other things that happen in the business. And so I'm here to try to help educate and illuminate other parts of the business so that you feel more educated around them. So with all that said, we'd love to get into questions. Thanks for being here.
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Moderator
Cool. So yeah, folks can drop their questions in the chat. I have one that came up a little bit earlier. Chris. So on the topic of headcount, do you predict that marketing and sales teams will downsize in 2025 as they become more efficient? What does the future of go to market teams look like in your from your perspective?
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Chris Walker
I don't think that sales teams will downsize and when you think about sales, it's closers. So I don't think that sales teams will downsize. I think the, the productivity and efficiency gains that happen through sales will take much longer because it requires fundamentally fixing the marketing and prospecting engine first before you can yield those gains. Right. So a company right now might say, you know, each of our reps gets 500k on average in revenue for the company on an ARR basis. Right. And next year we hope to get it to 525k which is a 5% incremental improvement in productivity. And in three or four years I think people should be aiming for a million. Right. So going from 500k to a million, which theoretically means that each rep does is twice as productive and you need twice or half as many reps to hit the same amount of revenue. But I Think that'll take three to five years. Because if you keep flooding garbage into the factory from marketing and performance marketing, low quality people and low intent prospecting, where SDRs are giving away gift cards to get people to sit on meetings so they can hit their target and their comp plan and they all move to closed loss, your sales team is not going to get more productive overnight. And so I don't see it happening in sales. I think that regardless of the level of productivity that marketing teams generally are, are over bloated and unnecessarily large. And I think it creates a lot of constraints having that amount of fixed costs, those that amount of management layers, that amount of approvals, sometimes at big companies it takes them like four meetings to send a fucking email, right? And like that is just totally unneeded at this point. So I think that a combination between AI offshore and just having smaller, faster, more agile marketing teams will be a huge advantage in the future. When I pretty that was part of my predictions. Much less W2 fixed headcount costs for a variety of reasons. One, just having less cost, having less of that cost be fixed so we could spend more money on programs or advertising, or be more flexible and flex up and flex down without having to lay off people. Being able to move faster, being able to leverage external consultants strategically for certain periods of time to get that level of knowledge and experience inside of our company without having it tied up in fixed headcount and having to go and do a new budget request for it. Being able to through the use of AI, have strategists also move to execution. So the cycle like before, one person writes the copy, then somebody else makes the wireframe, then it has to go back for approval, then the next person makes a design, then it goes back for approval, then it actually has to get dev, then it goes back for approval. And all of a sudden it took you six or eight weeks to build a web page. Where now the person that writes the copy can get it 90% of the way there on the page. They can write the copy, they can have AI create the wireframe for them. They can use a different AI tool to design the general layout using their own brand guidelines and things like that. They could get it, you know, 90% of the way there on dev. I'm not saying designers and developers are going away anytime soon. I'm talking about the time between start and finish in marketing activities can get so compressed because the strategist now has AI and other tools to be able to do much of the execution. So they don't have to have these feedback cycles. And on the sales development layer, I think that companies will keep it the same, scale it up 10 or 20% or scale it down 20%. The only reason that you would cut your entire SDR team right now is if you sell less than a 4 or 6K ACV product and you finally realize what I've been talking about for five years is that an SDR model does not work for a low ACV product like that unless you have 200% NRR or some ridiculous number which no SaaS company has. And so if you have that unit economics pressure and you finally realize that, yeah, you might have to cut the whole SDR team, but for any other company, they're just looking to improve efficiency. It's incredibly risky for a $30 million company to say, you know, let's get rid of our 20 SDRs, and I guess we'll figure out how to get meetings in a different way. It's just so risky and unnecessary. So I think it'll take longer for sort of the AI and other things to play out before we see dramatic shifts in SDR team size and headcount. I think it'll be incremental up or down right now.
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Moderator
Well, thanks for answering that one. Lots of questions coming through in the chat. I'm gonna bring Paul on next. Go ahead, Paul, when you're ready.
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Paul
Chris, you're the man.
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Chris Walker
Good to see you here, man. Thank you.
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Paul
Seriously, dude, I'm a major fanboy. I've been listening. I started back at 1:50 podcast 150, and I've been working my way up since then. I feel like I'm going to school, brother. Breath of fresh air.
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Chris Walker
Cool, man. Is it your first time here?
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Paul
First time here, but I've been watching a lot on YouTube.
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Chris Walker
Okay. Welcome. Yeah, man, glad to have you here.
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Paul
Yeah, seriously. First and foremost, I'm not an executive yet. I'm one of the leads in sales. And now I'm doing some content marketing, too. But cost of growth, what you're calling it now, or GTM efficiency. I personally feel like you could feel it as a salesperson how much effort it took to win some of these deals. And it never really made sense. Right. And now I'm thinking, okay, well, if me or others want to move on to other companies, once you kind of drink this Kool Aid, you can't really go back to what you've experienced before. So what do you feel like you could do in my position to kind of suss out some of these companies who I think you give them more credit than they deserve. A lot of times they're still behind on brand marketing. They haven't even thought about the cost of growth. I mean, what would you do, brother?
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Chris Walker
So I think that you can see a lot about a company just based on how they outwardly face in the public. Right. Many people joined refine labs in 2020 and 2021, like Garrett and many others, simply because they saw Megan and me and other people at our company posted on LinkedIn and said those people get it. Both the things that they're saying.
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Paul
Yeah.
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Chris Walker
And how they're saying it and where they're saying it. You can pretty much be clear. And you want to look at who are the executives that are doing that. Okay. Ideally the CEO.
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Paul
Right.
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Chris Walker
There's like a trickle down effect from the CEO's mindset to all the other executives and then that trickles down to all the different teams. So I think people should be evaluating the jockey, the head of the company, a lot more intentionally than maybe they have in the past. So I think that's one big thing. Because if the CEO gets it and they're doing certain things, they're hiring in a certain way, they're thinking in a certain way, they're measuring in a certain way. So I think that can be a really good public, easy indicator when you're in the interview process. I'm one person that I know told me about this. Getting really clear about asking the right questions about the financial performance, I think is super, super important. It also stands you out as an incredibly smart, sophisticated candidate to ask those questions. And if they don't want to tell you the answers, say, see you later. But asking about what was growth rate last year? Is it going up or is it going down? Why? What was customer acquisition cost? Payback period? Is it going up or is it going down? Why? What's happening? Asking about how they're thinking about competition and copycats and how those types of things are working. Asking about cash, are you burning? Are you profitable? Like, what's EBITDA percentage? You have debt on the balance sheet, what's net income? Is it the same as EBITDA or is it not? When are you going to have to raise again? Is it six months from now? Or you're profitable and theoretically have infinite Runway? So asking some of those questions I think can tease out because many people these days are searching for a company that operates profitably.
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Paul
Yes.
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Chris Walker
Just from a financial discipline standpoint. So you can tease out a lot of those things. In an interview process is like a final check. And if a company is operating profitably, it also depends on the stage. Right? You can be growing at 500% if you're 2 million in ARR, but you'd almost never see that at 50 million ARR. So stage can matter for growth rate too. But I'm looking for companies if I was going to join one a little bit more developed. Right? You win bigger if you join an earlier stage company. Something that I want to talk about in the next episode or maybe later today. But you as a potential executive or a potential senior level middle manager, a company that's already reached product market fit, has a good retention profile is on the way. Think 20, 30, 50 million ARR, I think is where you can really shine and learn because the elements of does the market want our product? Is our product good so our sales team know how to sell it? Those variables are out of the equation. Those have been proven out. So then a true marketer can just be the gas on something that's working. And so I think I mostly worked in before I just started my companies in 10 to $30 million companies is the range that I would start. And I thought that was a great place to start. You're early enough where there's 50 or 100 employees. If you do stuff right, you make an impact, you get recognized, you get promoted quickly. But a lot of those other variables that you don't have a lot of control over have been eliminated or have been proven.
- [29:50]
Paul
Well, I appreciate that, man. I'm also looking at any comments on your post if they're approving what you're saying or, you know, just kind of being a Luddite. That's something I observed too. So thanks again, brother. I appreciate you.
- [30:02]
Chris Walker
Awesome. Good to have you here.
- [30:03]
Moderator
Well, thanks, Paul. We're going to bring on Tatiana next. I'm going to unmute her now.
- [30:08]
Chris Walker
Go ahead.
- [30:09]
Tatiana
Hi, good evening. It's nearly seven in the evening in the UK and happy New Year to everybody. I brought my colleague David on as well, who's from Glasgow. He's on the call and I wanted to ask about a new PLG motion that we're starting in our business. Previously, for the last nearly 10 years, all our sales has been through slow relationship building, going to events and so on. And we're going to be selling through our website from this summer. My CEO wants to have two separate sales targets, one for the salespeople and one for our website. And I'm a little bit concerned that this is going to misalign sales and marketing and that it'll cause the marketing department to focus on channels which might be to the detriment of ourselves. I also think that we should also be focusing on marketing which will support sales people led growth. So I wanted to ask you how best to manage this from stakeholder management perspective and expectations.
- [31:09]
Chris Walker
So yes, I do think this would create obvious misalignment especially. You described it perfectly. What would be the outcome of what would happen? Right? Marketing investments then only go to things that benefit the website and not necessarily the sales team and vice versa. And so instead thinking about we have our target as a revenue factory, right? And then underneath that we want to collect the data to understand how to make our factory better, but not to goal people around it. It's another problem with the inbound and outbound. It's basically the same thing, right? In a different way. It's the same thing with the inbound and outbound. Like yes, we want to know whether we got that meeting from a third party signal from a data vendor, or we got it from performance marketing or we got it from an event. We want to know that data, but we shouldn't be goaling our teams around it because it creates unnecessary competition and crediting that doesn't help anybody. And so instead we want the data to be able to make better decisions. But the ultimate goal is to drive this amount of revenue. And if we get 5% less from the website and the sales team beats the plan by 5%, who the fuck cares? Secondarily, you don't have any baseline data of what the website should do. You don't know. You don't know whether it should be 30% of revenue or 10% of revenue or maybe everybody starts buying online. You don't know. And so making a projection on that and setting a target and goal is just literally licking your finger, putting it in the air and just picking a number. And I think that that is also a very risky and unnecessary, unhelpful type of proposition for everybody. And then I'll just say that there's a second order consequences of what you're doing that you should consider before you do it. Because many companies that I've personally consulted have tried to do exactly what you're doing and 30 to 60 days later kill it and go back to their sales led motion. Because what happens is that all the stuff that used to be creating a sales meeting that the sales team would develop in multi thread and sell for a hundred K deal now is going into a PLG motion or a E commerce motion that's half baked with an AOV of like 70 bucks or a free trial and you're not even making any money and they get lost in the product and then your sales team's trying to chase around a PQL that tried your product, thought it sucks and doesn't want to buy from you. And instead of having meetings for 100k deals now you're tracing around someone that paid 70 bucks in your your PLG motion over and over and over again. That is the exact pattern that I see specifically for companies that start sales led, have an existing sales motion that is working and then introduce this new thing called product led growth that diverts all of the demand that used to go to sales and puts it into this free trial or like self service E commerce motion and then your sales team starving for pipeline and it just people think that like oh I'll launch PLG and it'll be additive, we'll keep getting all the sales meetings and all the sales revenue and then a bunch of people, extra new people are going to buy out of our self service motion. It's not how it works. Conversely, it's a whole lot easier to start with a PLG motion, get to 10 million ARR and then start adding salespeople that pick out the best people and start doing upper market or more developed deals out of that pool of companies. But the other way around is very hard and so some people have to do it. Their investors are forcing them to or competitively they feel like they have to do it or some reason like that. I just offer that one, you don't have to do anything and number two just be aware of the potential consequences so that if it's not working for you you can pull the rip cord before it destroys your company or your your 20, 25 year.
- [34:30]
Tatiana
If I may carry on. We have a very in our vertical there's a very very large spread between private equity backed multi revenue stre the way to like little mom and pop owned premises. It's not feasible for our salespeople to cover the entire the long tail by going you know, sitting down in meetings and implementation projects with you know, mom and pop owned businesses. So that was the idea was to get these smaller companies to self serve and self educate.
- [35:00]
Chris Walker
Totally get it. Yeah.
- [35:01]
Tatiana
And it makes sense from a cost of growth perspective using that term that you started with. I'm just concerned that you know our project is actually quite complex when you get onto onboarding and implementation and I'm concerned that yeah we won't hit our target. And as you say, we might annoy or alienate our salespeople because they will be disincentivized and we'll be saying, well, there's this new channel which people can self serve on what am I going to get involved in and where and how would I be focusing my effort. But also I'm concerned that we're going to overcomplicate the sales process by lumbering people with self education and self implementation.
- [35:35]
Chris Walker
So everyone that I talk to says the same thing, right? We sell SMB or micro SMB, mid market and enterprise. And so we don't want to serve with our sales team. It's not cost effective to sell to micro at SMB. And then they assume that just the micro and SMB are going to buy that way. But what really happens is your enterprise and your mid market also go into that flow because it's easier. They don't have to talk to sales and they get lost in the product. And those companies need different sales processes and implementation and stuff like that. And then they flow into your free trial motion with your micros. And so that is the myth that most people don't see happening. And so what I would offer, and this is not, I'm not giving you this advice, I'm just talking to everybody about what I would do in this situation is I would either say we're not going to serve SMB and micro. It doesn't make sense to serve those people and we're going to focus upper market or we're going to launch a different brand that serves the lower market. And is PLG only the mix of the two together under one brand, very few can get it right. And when you look at the ones that have gotten it right, most of them, I hate to say it didn't even get it right. The people that you think crushed it, I don't want to say any names because I don't want to call people out and be like that. And also I'm under NDA with many but many PLG companies you thought crushed it. They have a great brand. They're the poster child for plg. They're fucking underwater and their stock's worth nothing. And they got propped up by their investors in the good market in 2020-2022. Zoom's a public company so you can reference that one. Like their CAC payback is 72 months right now. Like to try to get a customer that is totally unacceptable. You need to be three times better than that. You need to be at 24 months maximum as a public company like that. People think that there was many PLG companies that got glorified on LinkedIn specifically in 2020-2022 and many of those companies had a unprofitable, ineffective business model that got propped up by investors. Yeah, many people should, yeah, gosh, like even look in the like sales tech space. I watch companies that have a great business at 50 or 100 million ARR and say oh my God, that one over there is doing so good at plg. We need to launch a PLG and the one they're comparing to is burning a hundred million dollars a year and has a terrible CAC payback and they're going to go and copy that model because they think that it's better. I just really caution, like really cautioning. I think that the one place where I've seen it work consistently is a PLG first company that grew that then installs an enterprise motion to try to move up market. But many of those also fail because they have a PLG product, not an enterprise product and they say oh our enterprise version has SSO and you pay us three times as much per seat or something like that. And it doesn't work because they don't have an enterprise value proposition sometimes. Almost everyone that I talked to, Kyle Coleman at Copy AI is another one. He said we beat our head against a wall and they were an early stage company. We beat our head wall for 20, 24 months trying to do a PLG motion. We switched over to sales led, we increased our price, we sold to higher order companies in the lower regular middle market and all of a sudden our business grew by 10x this year. And so I just look at what people are saying. I have lots of data about what companies are doing. The companies that try to do what you're about to do, it always creates second order unintended consequences that are typically very negative.
- [38:47]
Moderator
Well, I'm going to bring on Tanya next. We've got a few other questions in the queue but if we don't get to them I'm saving them for next week. So just calling that out for everybody. Go ahead Tanya.
- [38:57]
Tanya
It's Tanya. That's okay, no worries.
- [38:59]
Chris Walker
Not if I've been calling.
- [39:00]
Tanya
Call me Tanya. Hey Chris, I've been following you for about five weeks. I want to say now and every time I'm on a call one I like that you're so transparent and you throw the F bomb out there and like it's no bullshit anymore. I love that in you but I learned Something new every time. And I think my question is really about the mindset. It's a little philosophical. So that mindset is, I'm a gen. I'm a Gen X. And I think we have an issue right now within our infrastructure, specifically in B2B, that we're very siloed, and we're not thinking about the buyer when we're making our decisions. We're thinking about that mql or we're thinking about the closed sale or thinking about all these minutiae things that really, at the end of the day, hey, I just want to know what our ROI looks like. I want to know. I want to look at this more holistically, and I think those silos really need to be broken and torn down. I wrote on this. I write on this on LinkedIn. I'm a huge advocate of really trying to look at the business holistically. And I think some of it's a mindset because today we have four unique generations. We have boomers, Xers, millennials, the ers. And I don't know what's after that, but we all think differently. And we're still in this mindset of the boomers and Xers, and we have to really think about the way we're approaching our methodolog and how we look at who we're going after and what that looks like. And I'm just. I feel like there's this core issue. Tatiana kind of teed me up for it when she was talking about, like, separating these two departments. I mean, that's effed up. That's so messed up like we have. But people are thinking that way. And so to me, the. The progression of where we're at, I think it's evolving, but it's not moving fast enough because it's still like that elephant in the room that nobody's really wanting to talk about, even though it's an issue, because this guy doesn't want to give any his money, you know, whatever he makes based on his bonus or what have you or his missions. And so how do we get into a place where people can really start thinking differently? And I know this is more philosophical than typically what. But I'd love to get your perspective on it, because it's ridiculous. It's absolutely insanity, in my opinion.
- [41:11]
Chris Walker
Yeah, let's go in two directions. So there's one just in the generations of marketing leadership. So I'll do that one, and then we'll talk silos after that. So I don't buy into a lot of generational stereotypes. Although I respect that people had certain experiences based on when they were born and what was available during the time of how their career evolved. But sometimes I'll run into a 50 year old person that is 100 times better at using AI than me, that has adopted social media better than most gen zers or at least has figured out how to use social media to drive business results a hundred times better than a Gen Z. Some gen zers are soup like that I meet at some places, are 22 years old and are super successful and everyone says that they're super lazy and entitled and things like that. And so I every person is their own individual and stereotypes are there for a reason. But I choose not to like sort of buy into them or look at them blindly. But here's what I will say is that for Gen X marketing leaders at the time when they were probably started being a marketing leader and how they learned how to do marketing was probably pre social or early social. The way they could they heavy in events and sales enablement and a direct sales channel, no e comm, very little digital and they didn't have access to their customers the way that they do now. So they would hire a market research firm to spend four months to do a survey so they could get a little bit of survey data and they hadn't. Didn't use a sales team, didn't use a CRM, they didn't have marketing data right. And then many of them were too high in the org to truly learn the tactical details of those things when they started to come out. And so over time there's a big gap between their tactical knowledge and how they think about how they should do market research and get huge sales opportunities. Between that and the people that are on the ground doing it, there's a. There's a big gap in how the Internet created that divide between that happened to be at a sort of a segment between those two generations of millennials and Gen X which frankly I think creates a huge advantage for a lot of millennials like myself and others. But that's not to say that people couldn't learn those things. I think the way they go about it is very different in terms of I think that every CMO should do something along the lines of what I'm doing right now. They should get all their customers together. If they're not an expert, they should get one of their people, whether it's a customer or an influencer on here. We should have a discussion with our prospective market and understand what they're Asking and they should be the person on the fucking call, getting the insights, organizing the stuff, building the community. Because they should theoret have a clear perspective on how are we priced, how are we competitively positioned, what is our website saying, what are the key features in our roadmap that we need that the product team isn't seeing because they're not meeting with the market all the time or they're not asking the right questions or not in the right forums. Marketing leaders need that thing. And if they were in there and they, and they like listened to the sales calls and they heard what people were saying, they would say, oh, people are hearing of us on social, people are doing this, people are doing this. And they would be able to see that and hopefully start to shift what they're doing. Point just got that one thing. And now on the silo sort of side, I think that the way that most companies, especially ones that raise institutional capital, venture capital money, the way that they get instructed to build and scale their company, is based on the success that investors had from companies they invested in 10 to 20 years ago that have exited. And so they look at, I invested in HubSpot in 2006 and HubSpot became a super successful company. And so now from 2006 I'm going to bring that to my 2025 investment and tell them to do the same things that HubSpot did in 2006 or 2008 or even what HubSpot's doing right now. And what a company that's publicly traded is doing has no bearing or not important to a company that's a 2 million ARR. And so you have, you have it coming from all angles. You have it from the investors that invest in the companies that are not in the details of the work. And understanding how the world is changing, you have massive analyst firms are the primary way that middle market companies and enterprise companies get advice about what to do that are so disconnected from how the world works and get paid to promote AI and different types of technology and things like that. You have technology, the biggest technology vendors that built their product about how the world worked 10 or 15 years ago and have no incentive to change it. So it's going to continue to cash cow how the product works, how we built it in 2014. Like look at outreach. I don't want to shit on anybody, but look at outreach, for example, right? Like the world has fundamentally changed since they built their product, but they have no incentive to change how the product works now. So it's still a spam Canon, which might have been fine in 2016, but is way less fine in 2025. And so, so from. And then you have, the executives were probably were successful with some companies before in their career and wash, rinse, repeat what they did at the company that exited in 2017. And so from every single angle, you have people that are perpetuating the same way that we've done things over and over and over again. And so that's why the silos exist. Why inbound is comp differently than outbound. Why the sales commission plan is still the way it is, even though the way that sales impacts a deal is a hundred fucking times different today than it was 10 or 15 years ago or even longer when those commission plans existed, were started and existed and nobody's challenged them. Why marketing comp is the way that it is and hasn't been changed before. Why, like marketers were usually not accountable to any revenue. It had no data when they were salary only. And so we just keep paying marketers the same way we did in 2007-2014.
- [46:36]
Tanya
Cousin. This, I feel always then goes back to the blame game. And the fall guy is usually marketing. And I don't think of marketing as, you know, I think there's a perception too. I do some volunteer work at my alma mater and what they're teaching some of these kids is all about creativity and branding and all of those things are really important. But I looked at the girl and I said, no, no, no. You want data. You want to know what's driving you both? Exactly. It's the right brain, left brain. But it becomes a blame game. And then I feel like marketing becomes the fall guide. And that to me is if we could break down and start looking at this more holistically, you would find that those issues are probably everywhere because of where it's starting. And we just choose to kind of ignore it and keep moving, keep moving on.
- [47:27]
Chris Walker
Yep. Many, many times marketing gets blamed, whether the company's right or wrong is whatever. Occasionally I've seen where the SDR function gets blamed because they missed their outbound target. Or I've seen where the AE team gets blamed because they were supposed to source 25% of their own pipeline and they only hit 18% and the company missed by 6%. It can happen at any angle, regardless of who's taking the blame. It's wrong and it doesn't. It's not helpful. That's, that's the, that's the core thing that I'm trying to get across here. And so yes, it requires a, a new way of thinking and a new way of looking at the data, which is difficult for many people to sort of wrap their heads around because of all of the inertia and constraints that exist, especially in more developed larger companies that as you get bigger, they're harder to change. Which is why you see earlier stage companies be more innovative, try different things, adopt new things faster than larger companies. And so that's something that, that's basically what we're working on at Pesetto. And I think that we'll have a. I think that we've already made a ton of progress and helped a lot of companies think about it differently. And I think that the solution has come a lot farther thinking differently. But like I mentioned at the beginning, it's a multi prong problem from how the executives think, how the financial data is structured, what the CRM data looks like, what technology tools are being used, how people are compensated, how individual teams or some functions are measured. And so it's just a complex issue. And so the real thing is, okay, we need to fix this, right, or our company might not exist or be valuable in five years. We need to do something different. What are the first one to three steps? And I think that's sort of what, what we've been working on initially because it's easy to try to boil the ocean and get nothing done. So it's really about focusing on how do we move forward without disrupting everything, what are the things that we can do to make big steps forward and what order should they be done in. So that's what we're trying to figure out.
- [49:11]
Tatiana
You bet.
- [49:12]
Tanya
Awesome.
- [49:12]
Chris Walker
All right, perfect. Great to have you here. Appreciate the kind words. I know we're a couple minutes over. Appreciate you all staying. We'll be back here every Tuesday, so feel free to join live. Appreciate all the questions. We probably have some stored over for next week. Week and then next week. Just to hold myself accountable, I want to talk about, to talk through as a prospective employee, whether you're C level executive trying to join a company or a manager level person, the difference in the stage of the company that you join in terms of your financial upside, what you should be looking for between comp and options or actual equity, the different challenges that you're going to run into by stage. So I'll hold myself accountable to talking through that because I think I have a clear perspective that could help a lot of people as they not try to select the necessarily the exact company, but to try to narrow in on what, what size company do I want to work on? And oftentimes I think the like a lot of people say I won't hire you unless you have 10 years experience in the medical device industry. And I think the the first segment when you think about both hiring and choosing a company should be stage, not industry, not target Persona. I think that stage is actually the most important part. And so we'll talk about that next week. Something to look forward too. Thanks everyone. Hope you have a great week and a Great start to 2025. We'll see you soon.
- [50:22]
Tanya
Thank.
- [50:44]
Chris Walker
Sat.