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Revenue Builders
What Great CRO-CEO Alignment Actually Looks Like with Bob Ranaldi
00:57:38
In this replay episode, John Kaplan and John McMahon sit down with former CRO and private equity operating partner Bob Ranaldi to break down what effective CRO leadership looks like from both the operator and investor perspective. The conversation explores how CRO-CEO alignment shapes company performance, why sales efficiency has become a defining metric in private equity environments, and why revenue leaders must take ownership of the forecast from day one.
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- [00:05]
A
Welcome to the Revenue Builders Podcast, a weekly show featuring B2B sales leaders and executives. Hosted by five time CRO John McMahon and Force Management co founder John Kaplan, the show takes guests in the barrel behind the scenes with the people who've been there, done that, and seen the results. Revenue Builders covers best practices for school scaling and growing your business while sharing the pitfalls to avoid. Enjoy today's episode.
- [00:33]
B
So, Bob, you've been a CRO yourself a couple times and now you're working at a PE firm and you're watching, I'm sure you're watching, the relationship between a CRO and a CEO. Let's talk about what a strong relationship looks like and maybe we'll probably even hit on the flip side of what a weak relationship looks like between a CRO and a CEO.
- [01:00]
C
Yeah, thanks, John.
- [01:01]
B
So start on anything.
- [01:03]
C
Yeah, that sounds great. I would emphasize a couple key points. I think the first is that the relationship needs to be one of high communication. So sometimes I'll speak to a CEO or CRO and say if weeks go by and you two haven't spoken together, things aren't working well. So there should be a very tight coordination of communication and the communication should be based on aligned goals. So making sure that CRO is well aware of what the CEO expects of him or her in that at the same time, the basis for their interaction, the communication, is in review of those goals and making sure that again, the two of them together are progressing favorably relative to those goals. So that'd be the first thing, just in terms of a general category, communication. The other is this notion of data. The data's gotta be at the forefront of the relationship. Understanding the, the key metrics, if you will, that those two are out to try to achieve and that there's like this objective nature by which they work together. They're looking at the data and understanding from an objective standpoint. Are we making progress or, or perhaps not.
- [02:13]
B
Yeah. Okay, so let's touch on a couple of those. Let's start with communication. And on the communication part, there could be many different elements to that. Let's first talk about what about agreement on the vision and the strategy and the goals. Like what are the growth goals? Who's the ideal customer profile? What's the go to market strategy? What's the product strategy? Shouldn't they have really good alignment on, on, on those things?
- [02:40]
C
Yeah, and you know, I, you and I have talked about this before. I think that the alignment needs to be one of. We both have conviction, they both believe that they're these things are possible, you know, and, and so the alignment between those and making sure that they're both like bought in and they have conviction that they can actually go achieve those goals together I think is really important. And I mean, I don't know how you guys feel about this, but I sometimes see that there's too many goals. You know, there's 10 or 12 goals when perhaps four to six might be at a more consumable number of goals that again those, those two are off to try to achieve together.
- [03:18]
B
And don't you think that there should also be, in order to communicate effectively that there should be clear expectations of what role the CRO plays and what role the CEO plays? Like the CRO should probably be responsible for revenue growth, sales, sales, productivity, maybe they give them marketing, maybe they have client success and then the CEO should be responsible for the overall direction of the company, the company strategy and definitely, you know, the product strategy. Do you see it that way or 100.
- [03:56]
C
I don't know how you guys feel about this, but like sometimes I feel like when the, the definition of the swim lanes is lacking, you know, people don't know exactly what they're supposed to be doing. Then you get people trying to do more than perhaps they're capable of doing and you get this overlap and people are confused and you get I think at some level dysfunction. So even just to add on to your point, John, like I think when you think of the, within the, even the go to market realm, you have customer success, people in SDRs and AES etc and the species, the specifics around what those people are expected to go do and how they're going to be measured and what success looks like. I think it's just super important, particularly when you're in a high growth environment where you're trying to do a lot with maybe limited resources, you're trying to do a lot in a short period of time. You know, oftentimes in private equity you're sort of working against the clock. You don't have the luxury of being in a public company or whatever where maybe there's a longer period of time to, you know, achieve certain goals. I mean there, there's a lot of emphasis put on, you know, these holding periods in private equity. So you might have three to five years. And so like each day matters. And again, you know, the, the, the thoughtfulness that goes into what people are supposed to be doing and what their goals are within the respective domains, I think is really important.
- [05:15]
D
Yeah, what about the, the nuances for Me that you just brought up in private equity is the exit strategy typically is different than Venture. And like you said, a typical hole could be three to five years. Where venture could be, you know, as long as, you know, 10 years or more. How important is it and in your role, how do you kind of bring people together on the reality of putting together the right plan, the budget? Because, because what I see sometimes is a big struggle is when the board puts pressure either on the CRO or, or on the CRO CEO to do a higher number, let's say and in a shorter time frame that, that budgeting, whether you make it or don't make it can be really difficult from an operating perspective. Walk us through kind of what you've seen and some of the advice that you give to, to, to, to both founders and to you know, CROs. Yeah boards and CROs.
- [06:27]
C
I think it's an excellent, I think it's an excellent point gap. And you know, just generally speaking the advice, you know that I give is that the plan should be brought forward by basically two mechanisms. One is like top down so they could. Top down is like the board and the, perhaps the CEO CFO are establishing a perspective on the market is growing at such and such a rate. We should be growing at that rate or better whatever the, you know, the, the mechanisms are where someone lands at a top down driven budget. But, but equally or perhaps more important is the bottoms up approach. So thinking about all the, the, the mechanisms and characteristics of getting to a number, like there's a number of MQLs and SQLs and the pipeline's got to be at a certain level, we need to convert at a certain rate and you know there's, there's a cross sell upsell element versus new business. And how many logos did we get last year versus how many can we go get this year? And so those that do that very thoroughly and, and I, I think work from a basis of reality versus like you know, nirvana. Like if everything works just perfectly, then we're going to hit our numbers. Those that have a degree of realism relative to the most recent quarters and most recent years and what we can do to build upon that. Again from a bottoms up approach, looking at all those detailed levers that you can pull to grow, I think is, is really important. So when you get that conversion to top down and bottoms up, I think you can arrive on a, a plan that's got some sensitivity to it.
- [07:55]
D
So, so the big one for me is like this, this understanding of one of the major differences is it's not that PE doesn't look at growth. Growth, growth is extremely important, but one of the major metrics is ebitda. And so you're balancing growth and ebitda and if you get that plan wrong, like you leave yourself no room for some of the adjustments that need to be made because there's really a higher focus on ebitda. Like how did you, what was your learning behind that? What can you share with our audience of you know, growth versus or growth, including ebitda? How do you manage that?
- [08:35]
C
Well, you know, the, the, it's a great point, John. The key focus within our firm fdv, and I would think or imagine that it is another private equity firm system, is sales efficiency. So it's the relationship of the spend relative to the results in the form of new bookings. So you're constantly trying to make your sales efficiency one that is attractive. And sometimes we get involved in an investment and sales efficiency needs improvement. They're spending more dollars then they're getting in return in the form of new bookings. And you know, we try to and oftentimes improve upon that as we engage with our invested portfolio companies. So that's a really critical measure in private equity is, is sales efficiency. So if you're a CRO and you know, you're not like sales efficiency isn't top of mind and you're entering the world of private equity as a sales leader, you should get oriented with that and understand like, you know, I've given a simple like definition. But try to understand, okay, how do I improve my sales efficiency? And perhaps when you're looking at companies or thinking about a job that you're going to go take, understand what the sales efficiency is because you may get pressure from the board and from the investor, the private equity firm that's invested in the business to improve your sales efficiency, you have to have that orientation be thinking about how you can, how you can go best impact that.
- [10:02]
B
Yeah. And that happens in any company, whether it's VC back to PE backed. When sales productivity goes up for the quarter, almost everything on the financial statement is going to look good. When sales productivity drops, almost everything on the financial statement is going to look pretty bad. So definitely that is to me, that is the key metric. Where it's not a key metric. Some people think it's a key metric just for the CRO. It's the key metric for the CFO and the CEO.
- [10:28]
D
I watched you do that at bladelogic. So a startup company, your focus was on growth, but it was all around sales productivity. Do you then move to a behemoth public company when Blade got bought by BMC and you had the same number one metric with sales productivity?
- [10:51]
B
Yeah.
- [10:52]
D
Was there any nuances in the two differences of a big company and a small startup? No. Same thing.
- [10:57]
B
Yeah. I'm sure if you're a multi billion dollar company and your average sales productivity drops for the quarter, you're probably going to have a pretty, pretty negative board meeting.
- [11:08]
C
No doubt.
- [11:08]
D
And Bob, you're talking about the same thing. Right on. Sales efficiency is the equal sales productivity. Is there any difference?
- [11:16]
C
I think there is a bit of a distinction from the standpoint that the productivity. John McMahon helped me out with this if you see it different. But it's like the business booked relative to the number of sales reps. And so it's fairly simple math to figure out what your productivity per seller is where the efficiency piece is really like the overall dollar spent on go to market relative to the, to the new bookings that you get, the amount of new AR that, that a company in a SaaS business that probably, they probably
- [11:44]
B
are closely related to each other the
- [11:46]
C
way, no doubt 100%.
- [11:49]
B
You know, there's other things that go in there as far as like what was the churn, what's the net dollar retention, you know, what's the cac, those types of things. But I think the premier metric that you're talking about is sales efficiency and sales product.
- [12:04]
C
Right. I remember while we're on the topic, I remember one of my first board meetings when John McMahon was involved in and after the first meeting John like slid me a sheet of paper and it was the five quarter report which I still have saved on my computer. So it's the trend of the key sales measures that I was handed from John McMahon I don't know 10 years ago and still use today. So it's know it's the CAC and it's NRR and it's LTV etc and just understanding like this is, I think when we think about data, one of the, one of the things and you know, maybe you guys have a point of view on this is that data is useful. But if you're looking at it in like a, a stagnant manner, it's like okay, what are those metrics this month? Sort of interesting but when you look at it based on the progression, you know, are we improving? Are we going in the wrong direction? So thinking about it over a period of time is really important. That may like come across as being obvious to the audience Listening to this, but I do see that sometimes even pipeline. Okay, we have $6 million of pipeline to work with this quarter. Well, how much do we have? Last quarter we had the quarter before. How much did we convert? Like the, the, the devil's in the details in terms of the historical element of all those, those really important sales metrics.
- [13:18]
B
Yeah, there's no doubt. And they're all interrelated. Like, sometimes you can see, like, I keep adding sales reps. My sales productivity is still holding, but for every time I had a new sales rep, I'm not adding any new logos. So the future's not looking bright. Something's going to break. It looks like it's almost ready to break. That could be a leading indicator, you know, that something's wrong. And I think what you're pointing out here is that between the CRO and the CEO, they need to use, you know, data to drive their decisions and then also align from those decisions that they make on what the future goals need to be and be realistic about it based on data.
- [13:56]
C
Totally. And what. Yeah, please, Jon.
- [13:59]
D
No, go ahead, Go ahead.
- [13:59]
C
Yeah, I just want to report I'm on a line of thought, but I want you guys to weigh in here too. But like, and again, I say this, like, with complete respect to these founders, in particular, these people that are running these businesses. But sometimes the mistake that is made is that where the data is not in the forefront, decisions are being made. So here's an example. Like, there could be, we want to drive outbound funnel development, therefore, we're going to build an SDR function. And the SDR function might just be getting to a point where it's starting to get to a point of providing a return. But because the data is not there, the founder or CEO or the company in general might say, okay, shut down the SDR organization. Tell those four people they don't have jobs anymore. And you're just at the edge of starting to see that, that return. So the, the point is, like, those leading indicators are really important in the, in the form of data. Like, how many calls are we making, how many discovery meetings are taking place, how many are converting to, to SQLs and moving through the sales process. And some companies will listen to this and they, they've got this stuff nailed. But I can tell you there are some companies that, that don't. And so like, the data, really important. And I think that I often see situations where the measure of one success is based on lagging data. Do we hit our bookings or not? Or things of that sort. But there's so much information, leading indicator form that gets overlooked oftentimes into this kind of a void of data in some cases.
- [15:33]
B
Well, you also see it when, if the CEO and the CRO are not communicating, this happens in PE firms and VC firms where, let's say they had 10 fully ramped reps and it's now November and they're, they're on a calendar fiscal year. CRO is not involved. They did 10 million. Average productivity, you know, $1 million. Each CR CEO goes into the meeting, comes out of the meeting, says, you know, Bob, we're going to do 20 million next year. Bob says, how are you going to do 20 million when we did 10 million with 10 reps?
- [16:05]
D
Yeah.
- [16:06]
B
Then they realized that they made a mistake because they have to hire 10 people like really fast. But there's a ramp time of six months. So they should have hired those people back in July. So now the CEO says to the CRO, well, just hire 10 reps now and you're not going to get 10 good reps now. You're going to get some Bs and some Cs. The managers are going to take the aggregation of the sales reps quotas. They're going to horsewhip the guys and the gals to make the number. They're not going to make the number in the first couple of quarters you're going to miss. Productivity is going to be down, costs are going to be up and you can have a really horrible board meeting. That's only because the CEO and the CRO weren't in discussions as to, you know, how are we going to align around future goals.
- [16:56]
C
Yeah. And, you know, you taught me this many years ago and I try to emphasize this point, which is it's important to make the numbers not just so that the board, you know, or that the operators within business feel good, but because it's, it's building momentum and the morale is a relationship to the success of the company. So when you have these companies that have set the bar and let's just say it's not even like a high goal, it's just maybe an unreasonable goal or unattainable goal. And they go quarters, in some cases years without making the numbers, I think those companies have to kind of reorient themselves a little bit and think about like, okay, you know, how is this impacting our morale? Because you can build momentum, string a few quarters together and you're making your numbers quarter after quarter. It's amazing. And God knows we experienced that at PTC John McMahon under your leadership, when you got this, you know, quarter after quarter after quarter, it, you get some serious wind in your sail, so to speak.
- [17:53]
D
What about the five quarter report? Like for, for people listening, what should be on there, how should you get the data, where should it come from and how should it be used all the way up at the board level? The point I'm trying to get to is can you kind of manage up, if you will, if you're a CRO, where you get everybody looking at the same things instead of every different board meeting? Let's look at these five things. And now we're going to look at these five things. So they send you away and you got kind of like rock management where you, you go find some new rocks and then come back. Like, how do you, what advice do you have for CROs to really nail that and then utilize it?
- [18:39]
C
I love that point because it does happen a lot. You know, you're, you're kind of scrambling and all the work you're putting into the board meeting is just for the board meeting, you know. Again, I don't know if this is great advice, but I say listen, like what we look at in the board meeting shouldn't just be for that moment in time. It should be the way that you guys run your business. You know, like if you're not using this data to run your business, then shame on us, we're missing the mark. But I think I'd say a couple of things, Sean. Cap, I'm like, I think less is more. Like, I don't think you need to have 50 measures. I mean, I think let's, let's get some consensus and orientation around really the things that matter most. But they, they should be numerical, you know what I mean? It should be things like cac, what their customer acquisition costs, you know, the, the, the GRR and NRR statistics are really important. Making sure that those are being measured closely. Ltv, sales efficiency, et cetera. Like those are, those are examples of things that should be on a list of six to eight really important measures. And you know, in terms of how you get those as a CRO, you should be getting contribution from finance, like finance CFO should really like closely working with you on that, making sure that you and he or she are closely aligned on those goals and that person has a mechanism to bring them forward. And maybe the last thing I would say just on how do you pull that together. Some companies will have their CRO trying to be something that he or she is not. Like they're super good hires, they're great leadership skills, awesome in front of customers and then they're trying to quickly become superstars when it comes to data. And in those cases, sometimes I will suggest that maybe have a rev ops person that can, can fill that void to could supplement the value that a CRO has. Like let's not bring down the, the real value points of the CRO by trying to take him or her off to do some things that maybe a rev ops person could do or a finance person could do perhaps better. And so like thinking about in that context which is like one plus one equals three like how do we get doing what he or she can do really really well and then on the data side maybe leaning on, you know, some other resources that may be excellent at it and could really help the CRO leverage that data effectively. So, so those are a few thoughts.
- [20:47]
B
I'd say let's go back to communication. What, what do you or how do you advise the CRO and the CEO to make sure that they are in constant communications and aligning on you know, priorities, challenges, expectations of each other expectations. Is there anything you recommend to them or advise them to do?
- [21:10]
C
Yeah, well, I mean I think start with the basics John, which is that for those that maybe are entering their first job in venture private equity backed business or there's a founder that's the CEO in particular. I mean here's a few obvious things like make sure you have empathy and appreciation for the hard work and effort that that person has put in to build his or her company to where they are. I mean my God, you know, these founders have made a lot of sacrifices. I'm not saying that you know, people might make the mistake but really being aware of that, socially aware, listening to them and understanding I think is really important. I, I am back to though when the, at the essence of the the a strong community communication is aligned goals. Looking at things again very objectively. I think if things get slippery when it's everything's subjective, hey I think this and you think that and of course there's going to be certain things that, that need to be looked at subjectively. But if, if, if data is the centerpiece of the conversation, you know, you're looking at numbers and therefore the conversation, the relationship should be very objective. And I think again if, if I'm a CRO, I'm trying to, I'm trying to understand what matters most and how do you define success? What's the success criteria look like and then to have that reflected in again A set of numbers and data that are at the forefront of the relationship and the forefront of the communication.
- [22:31]
D
Talk about what you, you're always giving advice that you believe CROs should feel like a peer to the CEO. Like, tell us about, like, not all of them are, but like, how, how do you give that advice?
- [22:47]
B
Yeah. What I see a lot of times, Bob, is that especially with first time CROs, they actually don't see themselves on the same level as the CEO. And they sometimes come to me and say, you know, this is wrong with the product and this is wrong with the company. And here's some things that, you know, we, we need to work on. And I say, well, have you spoken to the CEO about it? And they say no. And I say, why not? Well, you know, and they give some excuse, but what I really see is that they don't really see themselves on the same level as a CEO. And I say, look, you're not doing yourself any justice. You're not doing the CEO any justice. You're not doing the company any justice if you don't express your opinion of the way in which you see the business, the things that are going good and the things that are going not so well. Because if you don't do that, then the CEO doesn't understand what your opinion really is. And so if you don't, you have to see yourself on that same level on the executive teams of CEO, but at the end of the day, the CEO gets to make the final decision. But at least you expressed your opinion and CEO is paying you to express your opinion on what you think. But man, I've had to coach so many people up on that.
- [24:07]
D
I love it.
- [24:08]
C
And like, maybe just add on the. The thing I try to convey is, you know, you got to put the company first. This sounds a little bit like motherhood and apple pie, but when you go to work with zero, the company matters the most first. And like you individually in your department and your salesperson and your sdr, those things are important, of course, because they're part of the, you know, the overall company, but they matter less. And so you always got to put the company first. And I think if you can have that orientation, as you say, John McMahon, which is like, I got to think about like, the company's best interest and put myself in the, in the seat of the CEO and really kind of align on that, that thought process, I think you're naturally going to lean in the direction of like, okay, what's really best for the company. So again, it may sound Obvious to the audience. But I, I did it myself as an operator, and I do see people sometimes doing it, which is, you know, you get caught up in the four walls of business you're in and there's emotions and, and such, and you start to perhaps in some cases do what's great for you and great for the people under you. Maybe it's unlevel, but you're doing that sacrifice really what's best for the company. And that, that, that in the end doesn't take you to the end zone. You know, I mean, might win you a couple of yards down the field, but I can take you to the end zone. So I think it's got to be a little bit careful with that as zero.
- [25:24]
B
Yeah. But I think it goes over best with the CEO. When the CRO has the. Has the mindset of not the salesperson, but they have an owner mindset. When they have an owner mindset that works really well, number one. Number two, you can't go into the CEO's office and then dump 10 things on their plate. If, if you have 10 things you want to work on, pick the one that's going to move the ball the most and go in there and talk about that one. Now what I found, like, especially later in my career, is like, I would just go into the CEO's office, especially at night, and sit down. The CEO would say, what's up? And I go, nothing. What do you want? Nothing, Just want to talk. Then we'd start talking and all of a sudden he would see something that I saw or I saw something that he saw. And next thing you know, we're like, oh, shit. You know, that's a potential problem. We better take care of that now before it becomes a real problem. And that's just that one on one communication where you're just talking all the time. Whether you're going out for lunch or coffee or dinner or just spending. You get an extra 15 minutes, just go talk to the CEO. And the CRO should be doing the same thing.
- [26:37]
D
Are there any nuances now with Post Covid? I think that's an awesome point. I also see a lot of people that are hiring like, better talented CROs that were unwilling to move to a location. So you're making a point of somebody being in the office. It doesn't mean they can't commute. But what are you both seeing out there of when you have to have that great communication? What pressure do you have when you're remote or when you have a CRO and a CEO in a different location, which just puts on more pressure, a
- [27:12]
B
lot more when they're having arguments. When they have an argument, it does really, they kind of go head to head. In my experience of some of the companies I work with, CEO and CRO can really butt heads when they're in different locations and they never get to see each other face to face. Then what happens is they go see each other face to face and go to dinner to kind of hash it out and they come out like hugging each other. So it's a one on one and the face to face really works.
- [27:41]
D
You know, what advice are you given for, for this too? It's got to be big right now.
- [27:46]
C
It is big. And like to add to what John saying, like in those situations where you can't always be face to face over a glass of wine or a dinner, pick up the phone and speak to someone versus the email, the team's message, the text. I mean, sometimes you gotta do that. You're running out of a sales meeting where I get that. But the, the interaction verbally is the place to start. And then ultimately where you can be face to face and you can, you know, you can do what John is suggesting, which take a deep breath and just, you know, have a communication, you know, conversation together, I think is, is really good and most effective. John, one of the, one of the things I was gonna, what I was gonna say too, which is, I think along the lines of what you're describing it, which is this owner mindset. What I say to people is you get to think like an entrepreneur. Like if you're a CRO, because this is, this is, you know, this is a call up, you know, it's a level about CROs. If you're a CRO, look back on the week that you just had. Let's say you work 50 hours in the week. How are you spending those hours? And if you were, you had a sign up out in front of your office and you own the business and that sign was, had your name on it, would you have done those 50 hours any different or would you have done them exactly the same? And I think you got to have a little bit of that, that line of thinking which is, you know, sort of like, you know, I'm going to act like an owner and I'm going to think about like, you know, how I spend my time is really important. Again, I'm back to this. I think you can get caught up in the, hey, these are the four walls of my office and this is the company. I come to and you just kind of caught up in this routine and sometimes you lose sight of the fact that weeks and months and years are going by and you're doing things that you probably wouldn't do if you were managing the P and L of your own business, you know?
- [29:25]
B
Yeah, no doubt.
- [29:26]
D
I love that. You know, some of the advice I find that I'm giving more and more to not first time CROs, but CROs that are new to a company. I find myself saying this a lot. Be the same before you try to be different. And what I mean by that is I talked to so many CROs and they're like, hey, I'm going to put this process in. Because they have to be like, they have to show what they're going to do that's going to be kind of different than what the company's doing now. And they get hired that way and everybody's enamored with all these changes or all these ideas. And I just see some horror shows. I find myself constantly telling people, be the same before you try to be different. And I don't just mean do everything that everybody's doing. But it's such a different mindset when the leader is talking about us and we early because they, they, they're living it, they found out about it, they understand the customers, they understand the problems and contracts are fine, whatever, but the CRO is speaking from a terms of us or we versus they, you or them. I always find people that are using that language after about a month, they don't make it. Can you guys agree with that?
- [30:51]
C
I do, I totally agree.
- [30:52]
D
And there's so much pressure to like the first board meeting. What? Give me some advice on first board meetings for, for CROs. What advice do you guys have?
- [31:02]
C
I can start, I think the listening and getting a current state analysis is the key, you know, and doing it a very thoughtful way. Not going through the motions, going on meeting people and not taking notes and not really listening, but in a very genuine manner, just understanding the current state. You can't drag that out for perpetuity. You're not going to be like, okay, you know, I've assessed and into the job, but you gotta, you gotta dig in and you really gotta, you gotta listen and, and observe. And I like you're saying though, John, like, and start to, in your mind, start to think about, okay, now how do I, how do I take what I'm learning here and apply the things that I know I'm good at that I know can work? Like let's Stick to those. Let's get those, let's get those going. For instance, sometimes I tell people, like, go attach yourself to a deal. Like, maybe you can go take a 60k deal and make it a 260k deal, you know, because you elevated the conversation with an executive. Or like, okay, that's a win. You know, that'd be a nice thing to be able to talk about at a board meeting. And, and so, like, you know, it's, it's maybe a very basic example, but find, you know, find some of those quick wins, I think are, and, and do that at the same time of really listening to what's going on within your business.
- [32:11]
B
I love that.
- [32:12]
D
Do you guys feel like, for me, I'm also giving this advice, I always say, own the number as fast as you can because I see a lot of people that come in and they're talking about processes, we're talking about people and making sure everybody's okay, who's going to stay, who's going to go, blah, blah, blah. And I like what you said, Bob. Like, I find myself. What impact are you having on the forecast? Like now, like day one, how are you getting, how do you make yourself accountable and responsible? Because I believe CEOs are going to think day one or soon after that you're responsible for the number. So right away, right away, how do you balance that? Do you guys see the same thing? People are like, well, I'm, you know, I'm going to figure out how we do, you know, the first quarter and the forecast. You missed the first forecast. As a new CRO, you're in trouble.
- [33:02]
B
Yeah.
- [33:03]
D
How do you, how do you give that advice, Bob?
- [33:05]
C
Do you get a dig? Yeah, you dig in early and often. And then maybe on a related note, like, I'll show up to a meeting with his board meeting or whatever and I'll ask the Sierra, what's your forecast? And sometimes I'll get, you know, looking around the room because there's like this consensus and, well, let me check with the CFO and like, you know, let's just keep it simple. What, what number are you going to go produce this quarter? So it's, it's, it's underscoring the point you guys are making, which is that the sales leader does need to own the forecast and he or her needs to find ways to make sure that they're delivering on that, which obviously takes you to like, the proximity to the deals, making sure you're involved in understanding, you know, next steps, etc, but, you know, I don't know John, I don't know if I get a silver bullet on that one. I think you just got to jump in as quick as possible and just try to, you know, get on sales calls and you know, whether you use medic or band or whatever it is, go through the proper forecasting mechanisms to understand where's the, where's the pipeline, where, where my deal's at. Pick up the phone, call the economic buyer. You know, it's like the old line Dick Harrison used to say, which is the customer know they're buying. You know, I mean that, as funny as that might sound, I mean it's like, you know, you as the CRO, calling the customer to find out are they actually going to buy what's on our forecast and the time frame we're thinking about just things like, you know, again, basics I think is really important to get, you know, get a grasp of the forecast early on. As a CRO, I like that.
- [34:26]
D
Own the number right away.
- [34:28]
B
You have to own the number right away. You, that's what you, you're paid to do. And you know, you're also there because especially if you're a new CRO, you're there because something else was wrong. The last person didn't do the job. So the main thing is what I've always thought is I got to go in and figure out really quickly what's wrong and how I can boost sales productivity. Are they recruiting the wrong people? Are they not training their people and not developing their people and giving them to the wrong, wrong leaders? Are they not, do they not know how to message? Sometimes just ask them like give me a 30 second elevator pitch and they can't give you the elevator pitch. So what is it that's wrong so that I can get in there and quickly fix it, you know, and then start to put some processes in place and some methodologies and have a common vocabulary and start to lace those things in over time. But you gotta own the number right away.
- [35:19]
C
Yeah, you, you, you taught me this and I tried to teach people this or try to like whatever weigh in or give advice on it, which is, you know, the sales leader, you really do get a look in the mirror. So if your sales productivity is off or people are failing or whatever the case may be, have you really done all you can do and should do as a sales leader to make that sales organization effective? You know, have you done the role plays? Can they give an elevator pitch? You know, have you spent time on one on one, you know, working on their objection handling and I think more times than not when people really do that look in the mirror, they are recognizing that they, they do need to do more. So I mean it, it does that, that's a responsibility. As a leader you got to just be real about your responsibilities and you know, you can fake it to some degree but that ain't going to buy you too much time. So I think, you know, it's, it's on this point you're on John, which is like the enablement and just the way that you are making sure that you bought into making your sales team successful.
- [36:19]
B
It's really going back. Like you said Bob, earlier on is the data, right? So if you're looking at the data and you go back and grab the data over the course of five quarters and you see the number of new logos, the average deal size for new logos, the percentage of deals from new logos, you know, the asp, all of that stuff and then existing deals and the churn and the, you can start to see like where should I point my arrows to figure out why is that going wrong? What are, what are we as an organization doing wrong? So totally it's really smart to use, you know, a five quarter report and get all that data and then you can quickly see, you know, where the trends are. Really negative.
- [36:59]
C
Totally great.
- [36:59]
D
What advice do you guys have for CROs? Bob, you're a multi, multi time CRO. Johnny, you're a multi time CRO. I find that sometimes there's like a pack of dogs that travel together and there's like the CRO has chief lieutenants or even rev ops people or even enablement people. And I'm always wondering because I sometimes I see it work really, really well and then other times I see people trying to, you know, solve a problem the same way that they solved it at a another company. So what advice do you give? Like we're all trying to build our networks, we're all trying to have great people around us but we don't want to surround ourselves with people that aren't going to tell us we're not wearing any clothes. So what advice do you have for leaders that are building their teams and building their or CROs moving from one, you know, one opportunity to the next. How do you pick the right people around you instead of just saying I've got my team, like in the NFL there's like I'm going to tell you who my team is before I even understand what's wrong with the, with the team. I got my coordinator, but you don't know what the personnel is yet, let's say. So what advice do you get? And Johnny, what advice do you guys have? Making sure you're surrounding yourself as a CRO with the right team because you don't get do overs. No, you bring somebody in and it was your person and it doesn't work. That's a major strike against the CRO.
- [38:31]
C
It's not great. It's a super point you're on. And my response to it is also in relation to the CEO that's hiring a CRO. So even just in that context, which is, you know, let's use the acronym of icp, which you know, John talks about in his book when think of the customer profile that you know and there's characteristics and traits that you need to think about. I try to use that same concept when it comes to hiring. Like define really what is the ideal candidate profile? What are the tracing characteristics and experiences and get like nail the hell out of that before you go rush off and shoehorn in a CRO or a customer success person or an ae. Like to me it's all about the compatibility. And the compatibility starts with understanding what does the business really need. And to be real about that, if you're a new CRO, to ultimately get to the point John Kaplan, you're making, if you're a CRO, don't rush to, hey, I got the solution. I've got this bullpen of resources I'm just going to bring in here at the expense of not knowing what are the problems you're really trying to solve first and what is that ideal customer profile in all these different areas, these pieces that you'll fill, like have the patience to get that nailed first before you start to bring people in. Because it's going catch up to you in the end. If you make those mistakes, you get this person's out, this person's out because you didn't do the hard work up front. And I think that's really important.
- [39:54]
B
I think that goes back to looking at the data and figuring out where your issue is. Your issue may not be, which is what a lot of people do. They just bring in some of their leaders from the, from the last company they were at, you know, and maybe your issue is if you have a subscription business, maybe it's client success could be that and you really need a client success person, but you're bringing in new sales leaders. The one thing that I've seen, no matter who goes into a new company as a CRO, is there's going to be Three sets of people. There's going to be people that no matter what you say or what you do, they're not changing. They don't want new leadership. They want to do it just the old way, the old fashioned way. And they're not going to change. And they're going to hope that they're going to be your naysayers and they're going to hope that you fail. Then you had another third. People that are dying for new leadership really want to learn something new, want to be coached, want to win, want to make money, want, want to be coachable. They're adaptable. And those people are busy. They're out there doing, trying to do their job right. And then you get this set in the middle that doesn't know which way this thing's going to go with new leadership. And guess who they're, who's speaking in their air, the naysayers who don't want to change. So it's very, very important that early on you can go get some wins from people based upon you implementing new processes, new training, whatever it is, new client, success, person, whatever it is, to get some new wins, to prove to everyone, hey, this does work. And now we're going to get some additional wins and who wants to be on this train? And then what I found is that the naysayers, they almost basically get tripped by themselves. And that big group in the middle starts to move towards the performers, and the performers start to outperform anything that they did previously. And then from there, you now have not, not really the only people, the people that you brought in, but you also have other people that have become your champions. So just like, you know, we talk about to, to get to the economic buyer in a deal, you need a champion as a salesperson in your organization, as a CRO, you need your own champions. And those champions will tell you what's really going on inside your organization. And they'll kind of coach everybody on why that change is really positive for everybody when you're not there. So it's almost like any sport where when the coach is gone, they need some really strong champions in that locker room to keep that team, you know, moving in the right direction.
- [42:32]
C
That completely resonates with me. And like, I was just as an example, I was in a QBR in New York, I don't know, 60 days ago, and there's a new sales leader that's running this enterprise team of, I don't know, 16, 18 people. And I had dinner with the CEO that night, and I said, Dave, your sales leader won this group over. I mean, to use John Kaplan's words, like hearts and minds, completely committed, super engaged group. Like whatever that person did. And it's probably a lot of the things that John McMahon just talked about. He's just like, well, these people are bought in. And then you go sit in a QBR and you see the complete opposite. Another qbr, which is team lost. Half the people are trying to work on their resumes while they're in a QBR and thinking about leave. You know, it's just, you see the, like, it's easy when you're an outsider. You come in because again, you're not in those four walls until you come in and you can just sit there and observe and listen. And it did. The distinction between what John is, you know, so those, all those characteristics becomes like really clear when you go to a qbr. You just kind of see is this team, like clicking? Are they as a leader, are they bought in and all that kind of stuff? Or is it. Or is it the opposite?
- [43:39]
B
You know, now on this, because you're talking about the relationship between the CEO and the CRO. Any CEO listening to this and brings in a new CRO should expect that those naysayers, that naysayer group is going to be peeping in that person. The CEO's here. Also true. You know, because people would, when I've done and you know, a lot of times CEO would say, hey, you know, they just sent you this win loss report and you're not, you're not responding to them or they want to get a meeting and you're not responding to them. And I would say, well, you got to tell me why that's important. You know, and when he couldn't tell me why it's important, I'd say, okay, then that's. Then you already understand why I'm not meeting with those people. Right. I have other things that I'm trying to do.
- [44:18]
C
Yeah, I don't know how you feel about that jump, because I do what you just described, I do see often. And then you have this situation where there's this cohort of salespeople that either relationship with the CEO and they're commiserating on certain points and that's outside of the, the inner. The CRO doesn't really know what's going on. CRO may find out about it. That creates some tension. Like, I think that's, that's counter to what we talked about earlier, which is align goals and kind of working together and the communication CEO And CRO is like super tight. This commisera, commiserating and you know, sort of going around people and all that. I get it, like it'll happen time and time again. But like the more that you can minimize that within a business, I just think the more efficient the overall group is going to be.
- [45:02]
B
Well, you see it more and more weren't in a PE company, in a VC backed, like, you know, company, because the people have been revolving in and out in a VC backed company. But in a PE firm, a lot of those people have been there for a really long time. They've developed personal relationships with the CEO. And now here comes a CRO that's going to be a change agent. They brought them in for a reason. Now those naysayers are speaking negatively and trying to kill the, the CRO. And that CEO has to be aware of that.
- [45:33]
D
That's such great advice for founders that, that I mean I can think of like force management. We just brought a new CEO in recently and the founders are still in the company. Grant and I are still in the company. And that's a really delicate, you know, we have the most information about historically what's going on in the company. And that new CEO has to establish their new relationships with the management team who by the way has been there on average over 10 years. So you have to be really, really careful. And I think what Grant and I wind up doing is the first question we ask is what did the CRO say? What did the CEO say? So we always ask if they're coming to us and they haven't talked to the other person. That's an easy conversation. It's like, don't talk to the other person first and then come back.
- [46:22]
B
That's exactly what the CEO should do when people complain. Have you spoken to the CEO about it? Chances are they haven't. They're just bad mout.
- [46:30]
C
That's right. That's right.
- [46:31]
D
I want to, I want to make one reference to what you guys talked about and I think it's such great advice. Early on, new CROs to a company, not necessarily new in the role, but to a company, the best way is to kill like two birds with one stone. Get out and meet the people. But meet them under the premise of understanding what they're doing, how they're doing it, and, and help them get unstuck on deals. Like this is resonating for me because I see what happens is people spend 90 days and go out and meet all the people and have no impact on the forecast. You can't do that. You have to. At the same time, in the same conversations, you got to understand what they like, what they don't like. And then how can you help them get unstuck on a deal? I think those. That's such good advice.
- [47:22]
C
That'll help them win early. Help them win early.
- [47:26]
B
That's how you change that whole dynamic with the naysayers and the big group in the middle.
- [47:29]
D
Love it.
- [47:30]
C
Yeah, totally agree.
- [47:32]
B
And when, you know, the CEO and the CRO do come to a disagreement or sometimes they're holding like grudges and stuff and they have to talk about this disagreement, I think it's really important for them to understand, like, is this a difference of priorities? Like, you have a different priority than I do and you. So you see the world different than I do. You know, you have to, you know, close that gap and understand each other, not just fighting each other. Like, why is it that this new CRO sees it that way and why do I, as a CEO see it a little bit different? But you got to close that gap or it's never going to work. And then is this to your point earlier, Bob, is this somebody just using their gut or is it, you know, a data driven decision? You know, those types of things, you know, and then the other thing you think about is, well, okay, if we do this, what are the positive ramifications and what are the negative ramifications of implementing this thing that we, you know, may not agree on?
- [48:31]
C
Totally agree.
- [48:33]
D
Yeah. What about board members, Bob? You are involved with due diligence on companies. You're involved with, you know, making investments from LTV perspective. And then you're selecting board members. Like two things I'd like to talk about. How do you make, how do you do that? Well, how do you put the right board members on the right opportunity? And then the second thing, advice you have for CROs of kind of co mingling with CEO and board members because it's going to happen. Like advice there, first is how do you just, how do you help put together a good board? And then secondly, what advice do you give CROs with interacting with board members? Because they're always looking for dirt, or they're always not dirt, but they're always looking for something. Yeah. And you got to make sure it doesn't mess up the relationships that you have with the CEO and what have you.
- [49:28]
B
That's big.
- [49:28]
C
Right on. Yeah, It's a couple reactions to the question. So the, the first is again, and again, it's going to kind of sound simple. But, like, the board needs to do a needs analysis. You know, what do we do? We're trying to, we're trying to expand our partnership with SAP. Like, really important. That channel is gonna, you know, gonna be a huge growth level. Well, maybe there's someone that has experience there, relationships, and, you know, very simple example of, like, what could be part of the needs analysis. And just making sure that you don't, I don't know how you guys feel, but if everybody, like, is exactly the same, you know, they all have the same background and you have a little bit of redundancy. So I think you have some, some variety in terms of the experience set. And, and, and the value that one brings to a, to a board is really important. Try to think about, like, how do those piece parts in total add up to something really meaningful? So a little bit of a general answer back, but that's the way that I think about that. And, and I don't know. Like, I do see the, the situations where someone might have an issue that they're maybe voicing to a board member. Maybe it's the CRO, maybe it's the CEO, but it, again, it's going to sound really simple, but have those two actually talked? And to John McMahon's point, they got to the root cause of the disagreement. Like, let's really try to understand where's this person coming from? Like, what. Why are we disagreeing? And, you know, what's at the core of that, I think is really important. I mean, I get told it myself sometimes because sometimes I make this mistake. But, like, if you got a problem, you're not thinking about a solution, then, you know, you got to. Again, you're back to looking in the mirror, which is you kind of think about like, you know, I'm just complaining, or am I thinking about like, we got a problem in our business, and I think I got a really good solution that could help us solve for that. And so, like, again, sounds really basic, but people, including myself, sometimes you lose sight of that. You're just sort of like, stating a problem and you haven't really thought about, like, okay, that's sort of in the department of just complaining. You have it not coming forward actually with a, with a proposed solution. So I think that's really important. I try to push back. Like, first of all, like, if you're a CRO and you're talking to me as a board member about something that you should be talking to the CEO about, go talk to the CEO. First of all, I'm not Participating in this myself because that sort of falls in this commiserating category. And secondly, if you're bringing something to me that starts to look and feel like you don't have a solution, you're just stating a problem, then I sort of suggest and you ought to look in the mirror because you're really just complaining at the end of the day. So it sounds a little harsh, but like keeping those things in check I think is really important because otherwise you can run into areas of dysfunction.
- [51:55]
B
Yeah. On the board, I think the ones that I've seen work the best. If you're going to go put people on the board, as you think about the different disciplines that you have in your company, you know, sales, marketing, development. And then I've seen it where the really good CEOs bring in, you know, someone for sales to help the sales leader, someone for development to help the development person, someone for marketing to bring in the marketing person to help the marketing person. So aligning the board to the different disciplines in their company so they can not only be board members, but be mentors for those different disciplines. And I've seen that work pretty well. Now, for that to work well, the CEO has to be very secure in their job because a lot of times there's a lot of CEOs that don't want their, anyone from their company to talk to the board. Right, right. So in these companies that I've been in where it's worked really well, the CEO is very secure in their job and understands what these board members are going to do to really help the productivity of their people.
- [52:59]
D
I like that. Like, I'm just wondering for our audience, as you progress through your career and you, you know, you, you maybe have an opportunity later on in your career to sit on these boards, are there things that you look for? You just mentioned one a CEO that's very secure in their, in their skin or what have you. Are there other things that you see as like great characteristics and then some that you see as red flag characteristics? And that could go with people just interviewing to, not just from a board perspective, but people joining a company from a CEO, what's like a great CEO? And some red flags, I think when
- [53:41]
B
they see, they see things in the market so they understand, which is really important because I see in some board members that come onto the company and they have no idea what business the company's in because they're asking questions and I'm thinking, oh, I'm not so sure they know what business we're in, but there's other people that you can bring on the board that have fantastic insight into the industry that that company is trying to, you know, penetrate. And I think those are the ones, they might be around a certain discipline, like I said, but they also have really amazing insight into the market. They agree with that, the CEO and everyone else. Really good insight.
- [54:20]
D
Bob, what about from a CEO's perspective? Are there some characteristics of somebody that's going to be better at being open and taking advice and people that are not like, you got to make an investment in a company. I'm sure you're looking at the founder or the CEO and what's going to determine whether or not they're going to be good going forward. Give us some secret.
- [54:42]
C
No, I mean, we, we, you know, we, we do personality tests and Hogan tests, et cetera, to really understand, you know, at a sort of a deep level, like, what is the makeup of this person. And you know, again, I think it's back to compatibility, like, you know, the make of the person and what, you know, the, the testing suggests. We just want to make sure it's, it's compatible with what we're trying to get out of that investment and things that need to occur. And so a lot of those things are, you know, common qualities, John, as you would expect. And you know, those, that, that, that don't meet those common qualities, obviously we gotta, we gotta make sure that those are, those are taken out. Those people are taken out of the, you know, the consideration for, for the roles that we're looking to fill. But yeah, I mean, I do think that the, the confidence is an important one. And, and you know, being open and just, you know, having a mindset which is like, you know, sort of a winning mindset, which is you got to understand that you get a group around, you get the employees, you get the board. Like, how do I really leverage all these resources that I have in the most useful way to get the company where it needs to go? So it sounds obvious, but again, I see versions of that. I see those that crush it and do really well, and I see some versions where I'm a little skeptical. Maybe there's a lack of confidence in them or whatever the paranoia, whatever the right word is that is, is serving as a limitation.
- [56:04]
D
I like the, one of the things that I see is that people that bring on people to learn new things from the people they bring on or they're looking to bring on people just to fill specific roles that if I had time to do it, I would do it. Yeah, those are two different people. And when you can go work for people that are bringing people on that are looking to learn from the people that they bring on, that's always a better environment than the other way around. Versus I know everything. I started this as a founder. We grew. It just got too big. I can do your job. I could do your job. I could do your job, but I don't have the time. You know, I'm going to give you my opinion on what you should be doing in your job. I think that's a big telltale sign that you can. That's not the person I'd want to work for.
- [56:51]
C
Yeah, I'd agree with that.
- [56:53]
B
Good job, Bob.
- [56:54]
D
Robbie.
- [56:57]
C
I was glad when I got the call. I felt like I was getting called up to play with Gretzky and Nessie. Like, hey, we need you on our.
- [57:06]
D
You're amazing, buddy. Well done. Thanks, buddy.
- [57:09]
C
Hey, guys, thanks for having me. I enjoyed it and it's great to see you both.
- [57:13]
A
Thanks for listening to today's episode. If you enjoy the content, please subscribe, rate and review the show to help us reach more people. This show is brought to you by Force Management, where we help companies improve sales performance, executing the growth strategy at the point of sale. Check out forcemanagement.com for more information.