20Sales: What I Learned Scaling Datadog from $60M to $1BN in ARR | How to do Outbound in 2024 | Why Discounting is Dangerous and Contract Sizes are Misleading with Dan Fougere

Summary

Podcast Summary: The Twenty Minute VC (20VC) Episode: 20Sales: What I Learned Scaling Datadog from $60M to $1BN in ARR | How to do Outbound in 2024 | Why Discounting is Dangerous and Contract Sizes are Misleading with Dan Fougere
Release Date: November 22, 2024
Host: Harry Stebbings
Guest: Dan Fougere, Chief Revenue Officer at Datadog and Minority Owner of the New York Yankees

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1. Dan Fougere’s Journey from Engineering to Sales

Dan Fougere begins by sharing his unexpected transition from a mechanical engineering background to a leadership role in sales. Motivated by the potential financial rewards highlighted in a 1987 US News and World Report issue, Dan leveraged his technical expertise to enter the sales domain at Parametric Technology Corporation (PTC).

Notable Quote:
"I ended up doing mechanical engineering because I didn't have a lot of money growing up... I taught myself the intricacies of sales processes by immersing myself in the best sales teams I've ever been a part of."
— Dan Fougere [03:22]

2. Establishing a Robust Qualification Machine

Dan emphasizes the importance of having a disciplined approach to qualifying deals. He discusses the MEDDIC framework (Metrics, Economic Buyer, Decision Process, Decision Criteria, Identify Pain, Champion, Competition) as a structured method to assess the viability of each prospect.

Notable Quote:
"You have to look for the dirt and build that into every time you're looking at a deal. MEDDIC provides a structure to ensure you're thorough and objective."
— Dan Fougere [03:43]

3. Navigating Relationships with Economic Buyers

Building relationships with high-level decision-makers is crucial. Dan advises sales teams to identify and engage with economic buyers, who are often multiple levels above the initial technical contacts. He shares strategies on how to approach and communicate effectively without alienating technical users.

Notable Quote:
"In an ideal world, you're going to earn your way up. Start by focusing on those actually implementing the solution, and let success pave the way to higher-level conversations."
— Dan Fougere [06:02]

4. Creating Urgency and Magical Moments in Sales

Dan discusses the concept of "magical moments"—instances where prospects suddenly recognize the value and urgency of the solution being offered. He illustrates this with a story about securing a deal with Capital One by being hands-on and demonstrating immediate value.

Notable Quote:
"Magic happens when you turn a cold call into a compelling conversation that makes the prospect realize they need your solution right now."
— Dan Fougere [09:11]

5. The Role of Outbound Sales in 2024 and Beyond

Despite the rise of inbound strategies and Product-Led Growth (PLG), Dan asserts that outbound sales remains vital. He highlights the need for sales teams to differentiate themselves and cut through the noise using personalized and well-researched outreach.

Notable Quote:
"Outbound still has a place. You just need to get better and find a way to become the signal amongst the noise."
— Dan Fougere [14:46]

6. Balancing Pipeline Quantity and Quality

Dan and Carlos debate the merits of focusing on the number of meetings versus the quality of interactions. Dan agrees with the notion that quality should not be sacrificed for quantity, especially in the early stages of building a sales pipeline.

Notable Quote:
"Quality over quantity is essential. Focus on adding qualified opportunities to your forecast rather than just increasing the number of meetings."
— Dan Fougere [16:55]

7. Building a World-Class Sales Culture

Creating an inspiring and accountable sales culture is pivotal. Dan shares his vision statement aimed at building a legendary sales team at Datadog, emphasizing life-changing earnings, continuous learning, and long-term career success.

Notable Quote:
"We will have a legendary sales team making life-changing money, being best in class, and having fun... You will never have to look for a job again because the halo of our success will be over your head."
— Dan Fougere [00:00]
(Repeated for emphasis later in the conversation)
— Dan Fougere [42:36]

8. Effective Sales Hiring and Training

Dan outlines his approach to hiring disciplined and adaptable sales representatives. He emphasizes assessing candidates' life journeys, mathematical proficiency for technical sales, and their ability to persist through challenges.

Notable Quote:
"I look for discipline in salespeople because we're asking you to do hard things. It's about consistency, accountability, and the willingness to tackle challenges head-on."
— Dan Fougere [54:43]

9. Managing Discounting and Protecting Product Value

Dan warns against the dangers of excessive discounting, which can erode product value and set unsustainable customer expectations. He advocates for centralized control over discounting decisions to maintain pricing integrity and maximize long-term valuation.

Notable Quote:
"Limit discounting and control it at the leadership level. Let sales reps resist discounting rather than having fragmented, inconsistent pricing strategies."
— Dan Fougere [48:16]

10. Personal Insights and Overcoming Challenges

Dan recounts a pivotal moment when he faced setbacks at Medallia, leading to a challenging period before joining Datadog. This experience reinforced his resilience and strategic mindset, ultimately contributing to his success in scaling Datadog.

Notable Quote:
"When things go south, it's a test of your resilience. Navigating through those tough times taught me invaluable lessons about leadership and perseverance."
— Dan Fougere [59:00]

11. The Impact of AI on Sales

Looking ahead, Dan believes AI will enhance sales efficiency by improving research, communication, and proposal generation. However, he cautions against over-reliance on automation, emphasizing the continued importance of human connection in sales.

Notable Quote:
"AI can make you more efficient and effective, but the essence of sales—building relationships—remains irreplaceable."
— Dan Fougere [65:47]

12. Final Advice for Aspiring Sales Leaders

Dan advises new sales leaders to set clear, achievable wins, align with their CEOs on realistic goals, and focus on building a strong foundation through leadership, messaging, and process optimization.

Notable Quote:
"List out the wins you're going to put on the board and focus on making those happen. Share that vision with your CEO and execute relentlessly."
— Dan Fougere [66:54]

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Key Takeaways

• Structured Qualification: Implement frameworks like MEDDIC to objectively assess and prioritize deals.
• Relationship Building: Identify and engage with economic buyers while supporting technical champions.
• Sales Culture: Foster an environment of accountability, continuous learning, and shared success.
• Balanced Outbound Strategies: Combine quality interactions with strategic outbound efforts to maintain a healthy pipeline.
• Controlled Discounting: Centralize discount decisions to preserve product value and pricing consistency.
• AI Integration: Utilize AI to enhance sales processes without diminishing the importance of human relationships.
• Resilience and Adaptability: Overcome setbacks by maintaining strategic focus and fostering personal growth.

Dan Fougere’s insights provide a comprehensive guide to scaling sales operations successfully, emphasizing the blend of disciplined processes, strategic leadership, and adaptability in a rapidly evolving sales landscape.

Transcript

[Dan Fougere]

We will have a legendary sales team making life changing money, being best in class and having fun. You will learn more and become better at your job during your time working on my team than you would have at any other team during that same amount of time. And you will never have to look for a job again because the halo of our success will be over your head for the rest of your career and people will seek you out. That was my first day. I said that to everybody on the team.

[Harry Stebbings]

I mean, what a stirring speech. That is the speech that Datadog's Chief Revenue officer Dan Fougere gave to the sales team on his first day. That same sales team scaled revenues with Datadog from 60 million to a billion in ARR. Dan was at the forefront for that incredible journey. This is one of the best 20 sales episodes we've done, really diving deep into granular lessons in scaling Datadog to a billion in ARR. If that wasn't enough, Dan is also a minority owner of the New York Yankees. This was so much fun to do. But before we dive into the show today, my sales enablement platform is a waste of money. Ever thought that? Well, you're not alone. Most revenue leaders feel this way, watching their sales team struggle to keep up with market, product and competitive changes. Reps burn hours each day, searching, digging, slacking, desperately trying to get the answers they need out of their clunky tech stack. Well, that's why Speck, it's AI powered enablement platform, was purpose built to cut through the noise and meet reps in their moment of need. Speck it uses AI to recommend the exact content your reps need to close deals in any tool like Gong, Salesforce or Outlook. It's that that easy? If you're ready to give your reps a personalized enablement assistant at their fingertips, take five minutes and discover why leading investors like Craft and Felicis are backing Specket as the platform revolutionizing sales enablement. See for [e-mail] 20VC.

[Dan Fougere]

You have now arrived at your destination.

[Carlos]

Dan, I am so excited for this dude. I've wanted to make this one happen for a while. I am in awe of the Datadog journey and your role in it. So thank you so much for joining me today man.

[Dan Fougere]

I'm so happy to be here. Longtime listener, first time caller, I have enjoyed your podcast for years and I'm fired up for today.

[Carlos]

That is very, very kind of you, but I just spoke to Carlos at Harness beforehand and he said that I had to start with the mechanical engineering part he said, why did you make the move from engineering to sales?

[Dan Fougere]

Well, I ended up doing mechanical engineering, just engineering in general because I didn't have a lot of money growing up. I read a magazine in 1987 called US News and World Report. The seven top earning degrees all were engineering. And I was like, I don't know any engineers. I was living. I grew up in New York City and my dad was a cop. We were living in the country at the time, very rural place. I seemed pretty good at math and science and I got into it. I love technology. I always admired Steve Jobs and Bill Gates and those guys were kind of heroes from my childhood. And I got a design job in Detroit using CAD CAM software. And so I got pretty good at it. I went on to go work for the company. It turned out to be this company, Parametric Technology Corporation or P atc. I went there for the technology not realizing that they kind of possibly are the greatest sales team that's ever been put together. So this qualification methodology medic that everybody uses, that was invented there while I was there. Company was doing about 200 million a year. So they still had the DNA of a startup. And so I talked with them about just how they built an amazing qualification machine. Pipeline generation machine, sales process machine. And I just happened into that as an engineer.

[Carlos]

Okay, I have to just dive in schedule. How do you build a really, really good qualification machine?

[Dan Fougere]

You got to expect that bullshit is there. You have to realize that human nature is such that you want to have the rose colored glasses on, you want to believe the deal is good and you need to know that the opposite is probably true. And you've got to look for the dirt and you've got to build that into every time you're looking at a deal, you should be thinking about it. And now Medic is a nice way to have a structure, a framework for this versus some meandering conversation that may or may not get to the answer right. So your metrics, your economic buyer decision process, decision criteria, identify pain, champion competition. That's the way I look at Medic. And so in that way I can have a conversation in possibly even 15 minutes, but max 30 minutes and I'm going to be able to qualify this deal. We're going to be able to look for the, for the weaknesses and strengths.

[Carlos]

What questions do you ask to qualify the deal? Are there some standard ones which will get you to a conclusion more substantively than others?

[Dan Fougere]

You know, with the three whys in Medic are why should they do anything? Why should it be Datadog or whatever and why, why should it be now? And so asking those questions and you know, that's the thing about sales is it's not quantum physics. But we talked about discipline before, we talked about repeatability. And that's a big part of this, is just always doing the right thing, even when there's so many excuses to not do it. And the same thing with asking the questions, same thing with Medic. What metrics do we have that, that build some kind of business, even if it's a back of the napkin kind of thing, like why should they do it from a metrics perspective? Do we have any metrics from previous customers that we can use to tell a story there? Economic buyer. Do we know who the economic buyer is? What I know from experience is it's probably one or two levels above whatever you think it is, whoever you think it is. So when the salesperson is engaged in the deal, they're going to think that the person who's the technical user, that's probably thinking that's their champion, that person's boss, who really should be the target champion, that's who they think is the economic buyer. Because it's just too hard to realize that the person who's going to sign is actually multiple levels above where you've even engaged.

[Carlos]

How do we build a relationship with that buyer who's multiple levels up from the technical user without being patronizing to that technical user?

[Dan Fougere]

In an ideal world, you're going to earn your way up, right? And so there's two different ways. And so the fact that I was at Medallia and Datadog, back to back, are two extremes. So at Datadog, we started with hands on keyboards. The practitioner, the person who's actually implementing the cloud. It was crazy, man, because everything that we were told, everything that I was ever taught and I taught, come in high, get to power early. The reality is, so at Datadog, Amit, you've had Amit Agrawal on, right?

[Carlos]

Yeah, absolutely.

[Dan Fougere]

Amit and I went on a series of dinners with Shardul shah in early 2017. And we were. And it was all CIOs and CTOs. And we were so excited and we went to fancy restaurants and nobody cared about cloud monitoring. Everybody had just done big deals with Appdynamics and Splunk and Dynatrace and New Relic and they said, we already have the cloud handled. We just did a deal with aws. So they didn't want to talk to us at all. I couldn't get them interested. Amit Couldn't get them interested. Shardul couldn't get him interested. That's a lot of firepower. It's almost like the nature of the markets cycle was such that we had to focus on the people who were actually tasked with implementing the cloud successfully. And so we were selling to the people who were implementing. And the fact that Datadog actually worked, they could implement it. It told them things that nothing else could tell them. Then we built a groundswell from there, even. We got to leave your ego at the door and realize we're not talking to CIOs and CTOs. To answer your question, we didn't talk to them for a while. And so now at Medallia, what we realized is we had to invent how to sell Medallia. That was before Datadog. People might not know about it. It was a $5 billion exit, which is pretty good back in the day when those were big exits, before Datadog and Snowflake and companies like that. But we realized that we need them to change the way they're doing business, so we could only sell that product to the biggest companies in the world. We had the prospect. Forget about CTO, CIO. I did first meetings with CEOs, COOs, CEO minus one, at, like, companies like Verizon and Toys R Us, and you name it, big companies, Capital One, Marriott, because we needed to convince them that they needed to change the way they were doing business. So, two different answers to your question. One, at Medallia, we had to put together a value prop and a pitch that spoke to the people actually running the company. And at Datadog, we had to earn our way up over time and just recognize we weren't going to have the conversation. Conversation with the CTO maybe for a year or two until it became a bigger problem.

[Carlos]

Going back to kind of the structure in terms of, like, intellectual honesty with ourselves. You said about kind of the why now? Why do they buy it now? Why do they benefit from it now? It's very hard to say that. You have to have Datadog right now, otherwise you're screwed and next quarter will be devastating. Yeah, everything can kind of be next quarter. How do you think about urgency?

[Dan Fougere]

Well, brilliant question. Because that's where the action happens. That's where. So to me, magical moments happen in sales, right? And so a magical moment is I call you and you're like, I hate salespeople. I don't want to talk to you. And all of a sudden you're like, this is interesting. I'm glad this guy called. I'm learning I'm thinking, okay, that's a magical moment from a cold call in a meeting when somebody has their arms crossed and like looking at their phone and then they're like, wait a second, this is. Maybe I should get my boss in this meeting. That's a magical moment. And another magical moment is, holy shit, we need this right now. And so, for example, we were working on a deal at Capital One. They were the first. This is early 2017. So early 2017 I started Datadog. We've got a very good business that the boys created before I got there. And that was small deals, credit card deals, month to month, minimal human interaction mostly, almost entirely software startups who were born in the cloud. And so one of the things I talk about is don't f up what's already there and go build what isn't, right? And so I needed to build the enterprise, I needed to build Channel International, et cetera. And so the enterprise there were really, in early 2017, this might be surprising to some people, is there really weren't any production applications in the cloud for the enterprise. Capital1, their CIO just made a big statement that he's going all cloud. And this is when people thought you couldn't do it because of security and everything. We saw that One person bought $600 worth of Datadog, like $600 ARR. And here's another reason to work in the office, by the way. I was in the cafeteria getting some food that I was about to eat at my desk and keep working just like we all did. And I saw a couple sales engineers working hard and I was like, hey guys, you working on. Oh, we're working on Capital One. I was like, oh, wow. How much did they. They're a customer. Yeah. How much do they have? $600. It's like, what's that, two servers or something? And then I was like, well, why are you guys working on a $600 deal? And they're like, well, they have, they've just bought 20,000 servers from AWS or something like that. 8, 13,000. I was like, okay, I'd like to work with you on that. So we start working on it. They're actually on the verge of rolling out their first production application. They need to run, get all the metrics set up. And they tried it with, called Signal fx, they tried it with App Dynamics, they had a Linux update happen. And this is just us being like talking about being hands on. I'm not sitting at my desk, I'm not managing from, from afar. I'm There with the guys, we're slacking, like on a Sunday night. The engineer says, hey, guys, his dashboard has just went down with the other products and he's got Datadog working. They're going to release tomorrow with Datadog for their. For their qa. So it's like, okay, boom, we got it. We go to D.C. the next morning and meet with those guys. We write it all up, take screenshots, and now we are presenting it. So now, to get back to your question, how do we earn our way up? That's how you earn your way up. Like, when you're intimate with the business, you're figuring out what are their problems. And we're making sure the product's working, and when it does, we are singing it from the mountaintops. And so we're working our way up. So we kept working our way up to the next person and next person till we got a meeting, which I think may have been. Olivier can tell you if it's true or not, but I think it was the first time he met, certainly with an enterprise customer. And all of a sudden, that was our first enterprise deal, and it was for $1.4 million, and we had never had a deal like that before. And that was about six months in.

[Carlos]

I do just want to go back to the structure and the framework, then just be like, if you're honest, most sales reps are, like, screaming for pipeline, screaming for anyone to be a potential buyer today. If we're honest, if we're really cynical and take a very granular view to qualification, to look to weed people out. Dan, I'm going to have fucking no. 1, and I'm going to go to my sales leader and my pipe's going to be pretty empty.

[Dan Fougere]

So a mistake I've seen. So in working with a few companies over the past couple years, they're trying to qualify in the beginning, and you need to light them up with excitement. You need to get them on the hook by getting them as excited about what you have as you are. And so there's going to be some balance in the beginning of. You think you're barking up the right tree at the very least, because, hey, it's Capital One, they buy a lot of stuff. And so when you reach out to the person you talk, we're talking outbound, right? And so to be able to. And also, I saw your video on YouTube. I saw what you wrote on Twitter. Like, to me, you need to differentiate yourself by the way you show up. And the way you show up is going to be I've done research. I am coming. Coming in with value. I'm not coming in saying we're a cloud monitoring product. We're based in New York city. We have 500 employees. Don't do it. Don't even waste your time. But saw on Twitter you're implementing Redis. Our other customer just implemented Redis. Here's the video, here's his link on GitHub. Would love to see if this is interesting to you to see if we can help you guys have a similar success. That's step one, something like that. Next two days later. Hope you enjoyed that link about Redis. Also saw you're trying to implement Kafka or Kubernetes. We've implemented Kubernetes ourselves. Here's a link with some of the dashboards our own people are using. Okay, do I have your attention? Like, I'm not some knucklehead just trying to like make some money. I'm trying to help you and I've done research and I've learned about you. This is some of the techniques that we use.

[Carlos]

Do you think Outbound still has a place in 2024? We are. I'm getting inundated by emails now and AI will make that worse. Do you think outbound still has a place?

[Dan Fougere]

The same conversation has been happening my entire career. And so my answer is yes, you just need to get better and find a way to become the signal amongst the noise.

[Carlos]

Should AES do their own Outbound or should we fully give to SDRs?

[Dan Fougere]

I call it pipeline generation PG. And so asking somebody else to do PG for you is like asking them to go to the gym for you. I don't think it creates the right culture to think that this is something that can be outsourced. PG is everybody's job. And so whether you're a sales leader, ae, sdr, we're all constantly trying to get. We are in the deal creation business. And when I say, I said to you and I sent you an email that sales leaders should run to the front of the sales process. And I can guarantee almost every time I've talked to a company for the first time, I don't want to lead the witness. So I don't want to say, hey, what do you. Are you focused on pipeline generation? Because their answer will be yes, of course. More I'm going to say, what'd you do this week? What meetings did you go on? What'd you do on Monday, Tuesday, Wednesday? What meetings with companies where stage in the sales process? I can start to see Are they out in the field? Most of them. If they are doing any customer meetings are in closing mode, they're trying to be the closer. And if you don't have enough pipeline and you have a really high close rate, you're not going to hit your number. But if you have a ton of pipeline and even if you have a lower close rate, you're going to hit your number and probably a bunch of those deals are just going to close next quarter anyway.

[Carlos]

Okay, so I'm going to pit you against your mate Degnan. Degnan said on the show to me, hey, if you have more than, I think it was eight meetings a week, it may have been five, five or eight, you're not going to be doing well. You need to do qualified research. It needs to be really well informed. So if you're doing more than eight, you're not going to show up. Well, agree or disagree and how do you think about that Pipe versus quality?

[Dan Fougere]

I think he's got, I think he has a good point. I think it depends on the stage of the company. But generally speaking I would agree with him that quality, you don't want to sacrifice quality for quantity. So the other thing I'd say about instrumenting the business and you sent me something about operational and so when you think about being a sales leader, you've got kind of two sides, right? One side is the inspirational sales leader who can get everybody fired up, who can can convince a customer to win or to do the deal. And then the other side is the metrics based data driven. Let's instrument the business the right way. And so part of instrumenting the business too is to distill down to the minimum number of metrics that you need to run the business. Because I don't want the salespeople spending all day in salesforce. I want to know just a few things. So the number of meetings that I tracked to go to the number of meetings topic was always number of new business meetings and number of opportunities added to the forecast. So I was not ever really managing the number of meetings per week. I want to know did you add a qualified opportunity to the forecast this week and did you have new business meetings which were basically discovery meetings and demos like a datadog? When I left it was one of each of those a new pipeline opportunity that's got a specific definition and a new business meeting for enterprise and two for SMB. And if I had those, I guarantee you you're going to make your number this year and you're going to make more money than you ever made before, and you're probably going to get promoted. Those were the only number of meetings I managed to.

[Carlos]

My challenge is in a world of PLG and just in a world of kind of try before you buy and more individual advocates. What started small can become very big, as you saw with Capital One. But it's very easy to do what you said, which is 600 bucks, who cares? And so how do you think about not diminishing importance from accounts because of their small entry point and giving justified weight on what they can be?

[Dan Fougere]

Oh, man, such a good question. That's why you're so good at this. And we got a relaxed vibe going. So people wearing hats, sitting on couches. So when we started the enterprise at DataDog in early 2017, as I mentioned, there were no big deals to be had. We were, we were, we were lucky that we were able to pull off that Capital One deal. Little bit, a little bit of, of great execution and a little bit of luck. And those deals were not, were not around at other companies because Capital One was such a leader going to the cloud. I had to convince the enterprise people, as long as it's a real project solving a real problem, we kind of don't care how small the deal is. Our hypothesis was that this cloud thing was going to take off, and when it takes off, whoever's in the stack is just going to scale with their applications, which is kind of like, to me, what I saw with Snowflake. This is real time. So we didn't see this yet. This is 2017. Our idea was just get in there and be part of it. And if it was like a. Generally speaking, probably minimum for the enterprise was $10,000 ARR. Because then you got enough servers to. There's some heft to it. And it happened all the time. But in the beginning, it was a leap of faith because their quota was over a million dollars. And so they were like, dan, how are we going to make any money here when we're doing all these small deals? And just like, hey, have faith that it's going to grow. It's going to grow. Once it actually took off, then we didn't need to convince anybody. But there's that period of time when you're transforming an organization before you have enough victories to prove your idea that you have to keep everybody in the boat. And I say that you need to be in the boat with them. Them. Partly because you're making it happen, partly because they need to see that you're with them. Like, we're taking the sale and I'm with you. I'm carrying the flag up front. And also so you can gain the pieces of feedback that you will need to iterate. Like maybe some of the things are not working. Like for example, the demo in the beginning was just walk people through the features. We had to tell a story. I had to like, it was a little extra hard because the essays at that time did not report to me. But still it's like, guys, we're not. We need to tell a story. We need to show something more compelling. So little things like change the demo, etc. And then they could see we're getting better anyway.

[Carlos]

What are your biggest lessons on how to do a sales demo? Well, and where do most people fuck up?

[Dan Fougere]

Well, make sure that you do the discovery ahead of time. Understand their pains. Think about it in terms like put yourself in the shoes of the customer. And it's not about features and it's not about show up and throw up. And you want to be able to say, hey, Joe told me that he's trying to make decisions but doesn't have the right information. And that led to application downtime. So we're going to show you an example of how you can do that in your environment. You told me you have, you know, a Unix machine. Here's a Unix machine so they can start to see themselves. It's like telling a story. It's like if you're reading I started reading the Great Gatsby, but. But if you are going to identify with the protagonist in the story, then the author has you. And it's the same thing with the demo. I need to see myself in this story and I can see how my life gets better. I can see how I get better at my job. I can see how I get home to my family earlier. I get promoted, I get kudos from my boss. Things like that.

[Carlos]

You said about show up and throw up didn't sound great any like glaring. Oh, oh God. So many wraps do this that they shouldn't do.

[Dan Fougere]

So John Kaplan is a great sales trainer and leader. He says you don't come in with your hair on fire and the product manual in your hand. But that's what a lot of people do. If you don't know how to sell, then you're going to think, I'm going to show up and show you all the features. Look, we can do this. Look, we can do that. Look, we can do this. And then back in the day they would call it taking a plate full of spaghetti, throwing it at the wall and see what sticks. And it's just like, I'm going to keep saying things to you that we can do until you say, oh, that's cool, that's a terrible way to sell and you're just wasting time. And really, in the end, what are we talking about? We're talking about maximizing the valuation of companies, right? And so as when I think about what my purpose is always the money is in the equity, right? You can have a good comp, you can have a good commission check, but really, when it comes down to it, the money is in the equity. And whether it's your first one or your second one, I've done five startups. Four of them had good outcomes and each time I got more and more of my compensation from the value that I created in the company. And so all of these, if you think about that movie, any Given Sunday with Al Pacino is like it's a game of inches, right? And if you can get a little bit here and a little bit there, all of a sudden it adds up to a lot and all of a sudden you're winning.

[Carlos]

My first thought to you here is that when we're in that sales demo, I had David Schneider on the show.

[Dan Fougere]

Now, I listened to it. He's phenomenal.

[Carlos]

And he said there are three reasons why people buy software. One to save money, one to make money, and reason to keep them out of prison. Do you agree with that?

[Dan Fougere]

When you hear that Dave is talking there about more probably corporate motivations. And so, and those are important, but they're also abstracted away from the motivations of the people you're actually selling to. And so the ones that are going to cause those magical moments probably are more about personal motivations, right? Which is, holy shit, I'm not going to get my bonus unless I can show that we are compliant with society, you know, standards for security by December 15th. And you should know that as a salesperson, you should be familiar enough. And this is another reason to get out of your office and get off Zoom and go to the customer's building and hang out with them and spend time. Because a 58 minute meeting on Zoom where everybody else is paying attention, people are not sharing some things that maybe they're going to share when you're just hanging out, having a beer at TGI Fridays after the meeting or at Starbucks or whatever it is. That's why I say old school is the new school and it's the good school. Because the things that worked for the Fuller Brush salesman or IBM Or Wang, it'll always work because humans don't change. And so the technology has changed. You have some plg, you got zoom, great, use it, but don't use it at the expense of the connecting with people and becoming more intimately familiar with the personal drivers of the people you're selling to.

[Carlos]

You mentioned also, hey, we're very happy going in taking a small contract because we believe in X and we believe in the expansion and we let them expand. Dude, Degnan says customer success a la poubel, which means to the trash. Do you agree?

[Dan Fougere]

So, such a controversial topic. Listen, cs, is it technical support? Is it a less well trained, less well paid sales team? What are you actually really trying to do here? And I think based on the product there might be different explanations. At Datadog, there was something brilliant there where I don't know if you've talked about this with anybody, but so we focused the commercial team which really focused on startups, so we would get them focused only on new logos. And I would say this is true about enterprise and I say this is true about Medallia. And this is one of the things I feel very proud of, is that my team is once we got going, we will get a meeting with somebody who could influence a deal in 30 to 45 days in any company, like a real meeting. And part of that is you have to be focused and you can't be distracted by. Because human nature is such that you're going to seek pleasure and avoid pain and you're going to avoid the hard work. That's like we were talking about going to the gym, but most people don't do it because it's hard even though it's so good for you. And so the same thing with outbound and pipeline generation and breaking into new accounts. And so we gave them when they broke into a new account, whether it was inbound or outbound, doesn't matter. Better. They had four months to sell more products to take advantage of some of the growth that they might have because a consumption model. And then after that point it was passed over to customer success. And now in a one product world that was great. And we originally had one product and so now some of those really small accounts had weird names, Airbnb or Zendesk that nobody ever heard of until everybody heard of them. And so the CAC was incredible. The growth was non commission because CS did not have commission. Right. That's pretty incredible. Now if you look at, in a multi product world where you then have to go back and sell multiple products or Once things started to get competitive, then you want to have somebody who's got more of a sales, more sales capabilities. The answer is I think you got to have to design it based for your company, based on what you're trying to accomplish. Listen, that model that I described, Datadog, is worth what, 36, $40 billion? You can't question anything that's done. It was a phenomenal success. But could that work in every company? I'm not so sure. Right. Would I personally replicate all of it? Some of it for sure, because some of it was fantastic.

[Carlos]

How do you think CS should be comped?

[Dan Fougere]

Well, it depends on what they're doing and because the other thing is for the enterprise. So we had CS for enterprise. When you have a cloud based startup, they have cloud ninjas. Now more people are cloud ninjas today than seven years ago. When we went into some of the enterprise companies, the cloud skills were not as predominant and so they needed more help. And you're working your way through bureaucracy, you're working your way through people that have older sets of skills. And so what we needed there was not somebody to clip the coupons every year. It's for the renewal. Like, hey, you're using more, you should commit to more. It was, how do you actually implement this stuff? Even though we designed the product so that you wouldn't need implementation services, once we broke past the early adopters of the cloud and we started to work with the legacy folks, then we needed more help. So for enterprise CS it was more about kind of like implementation and support. For commercial CS it was kind of like a sales kind of capacity. So I think you got to figure that out from your model too. And so you think about how much are we paying? If you're early stage, just let's get people to buy this stuff. We are trying to figure out product market fit, we're trying to figure out how to have a sale, what sales process is repeatable, all that stuff. And you're going to iterate and figure out are we paying too much here, we paying too much there. You're probably not paying, paying too much for new logos, new business units, new products, breaking into new segments like enterprise. I think you have opportunities on the back end to see the revenue that's coming in that maybe is going to come in. No matter who's sitting at the keyboard, you might have opportunities to really get efficient there.

[Carlos]

You mentioned repeatable sales there. And knowing when you have it. I'm getting into a really core problem for a lot of people, but I just Want to first define what does a sales playbook mean to you?

[Dan Fougere]

In an ideal world, I can take somebody from the outside, take them to new hire training. And like when we were doing new hire training, my last two companies when I was running all that in the new hire training, we would get outbound meetings. Your first days, we are cold calling. I have it all documented that these are the Personas, these are the challenges they have. This is some of the terminology you need. These are the things you can say. Here's how you handle objections, right? So that's like front end of the playbook. Now, discovery call, right? Format for discovery call, questions to ask, how to manage it, to be pithy and concise. 30 minutes. Are we barking up the right tree? Do they agree to move towards our next steps of having a demo with the right people in the room? Demo. So chronologically, working through every step and in the beginning, if you are a new CRO and you're like, oh, I don't know, all this stuff, stuff, you can have a. It's a generally repeatable framework, right, where you're going to say, I'm going to identify my ideal target customer, ICP, people call it these days, my outbound calling, emailing, LinkedIn, GitHub, whatever. And now I'm going to discovery how I do that demo. What do we show in the demo? What are our desired outcomes? What are our exit criteria for each of those? If they say, yes, we think this is the right product for us, yes, we would like to move to some sort of validation, then you can leave. Yes, I will commit to getting you to, you know, a meeting with the economic buyer, something along those lines. Then I have exit criteria to go to the next phase of validation.

[Carlos]

This sounds like quite a lot, if I'm honest. So when I hear you talk about this, I then go back to the statement that I'm often told, which is founders should be the one to create the sales playbook. And I'm thinking, gosh, I don't know many founders that could create that pithy qualification, 30 minute cool criteria as well as you just did there. I don't think many founders can create the sales demo templates for different verticals. Should the founder be the one to create the sales playbook?

[Dan Fougere]

I've never seen it. To me with all these kind of, should this be the case? Should that be the case? Like, okay, somebody might have an academic idea, show me how it's actually been done, done. I would say at Datadog, Amit probably did it. He, I know he did right. He did it before I got there. But it wasn't like what I just described. It was more. There's some marketing that they see that talks about implementing the cloud. There's a link, you link to the demo, you get an online one week demo, you put your credit card in, somebody calls you to do the deal. Now you have Datadog, right? Something like that. And that's a great way to get started. But you're not going to scale to billions of dollars of revenue, at least in my experience with that you're going to need more of what I just described and every place I've ever been that's been the sales leader doing that.

[Carlos]

So it's the sales leader who does that. Great. When I had Chad Peetz on the show, who was fantastic by the way. God, this guy does not hold back.

[Dan Fougere]

One of the best recruiters of all.

[Carlos]

Time, he said that you have to hire a Croatian pre product. He said that fundamentally provide context. Fundamentally. Founders are often very product or engineering centric and they can't do customer discovery, qualification, feedback in the way that you need to. And so you need a CRO pre product. Agree or disagree?

[Dan Fougere]

I wonder if you could even say Snowflake was an example because Chris Degnan now is not Chris Degnan nine years ago or eight years ago. @ the time when he joined, if I recall, he was more of like a first line leader, second line leader, super talented, a lot of headroom. But Dan Fougere 2016 is not going to a pre revenue company. I went to Datadog. Carlos goes to MongoDB to build that sales organization.

[Carlos]

And for Context, Datadog was 60 million.

[Dan Fougere]

An arrow 60 million when I went there. At that point in my career when I'm like a legit CRO candidate, I had done most of the things at Medallia. I hadn't been the CRO, but I, I did a lot and I was ready for the job. And a $60 million a year company doubling year over year. That's where I'm going. If you can go to a, if you're good enough to go to a company that's 60 million ARR, a hundred percent year over year growth, why would you go to a company that has zero revenue growth? I don't understand it myself. It's an interesting thing to try, I think having a salesperson there.

[Carlos]

Well, Jason Lamkin says you'll never get a great sales leader willing to do it twice because it's so freaking hard in the early days. You'll get a Dan Fougere at the start of your career will take that early sales role, leadership or not. Because no offense, dude, you don't have that much Choice. And it's 2 million or whatever, but you're not going to go back to a 2 million ARR once you've taken it to 100.

[Dan Fougere]

To me, there's two different splices off of this question. One is, would you go back to a smaller revenue company? And I did. I was at Medallia, which was at the time 300 million a year, and I went to Datadog for 60 million a year. Turns out to be a good choice and I went back in revenue. The other question is, after you do this, would I go and do the CRO job again? And the answer is no, because I don't have to, because it's super hard. Scott Davis calls it chewing glass. Like, would you chew glass if you didn't have to? And the answer is no. The way I look at it, generally speaking, if you're doing the job right, it's probably the second hardest job in the company after CEO. It's the most quantifiable as far as performance. You're listen, OKRs are not necessarily thrown up in front of the board. And if, like, if you miss them, they're thinking about firing you as much as if you miss your sales targets. They're all thinking, do we have the right guy? You're thinking about that every day, every moment, and so much could go wrong. Right? There's so much pressure.

[Carlos]

Does it get easier with time when you're like five years in the role and you are a legit sales leader and you're Ollie's right hand, are you like, I'm not fucking five?

[Dan Fougere]

Yes. And so here's again, the answers are all in the context of growth phase. Really? Because could I go to another company where the hard work's been done and be the exec and clip some coupons? Sure. But if you're talking about, hey, there's no enterprise sales, there's no messaging, there's no forecast. Like when I went to Datadog, I asked, hey, what's our forecast for the month? And the sales leader said, I don't know, we had to build all that. Doing all that again sounds too, too difficult, right? If you don't have to do it. And so if you haven't had the big hit and you still have to do it, then you keep doing it.

[Carlos]

Can I be blunt, Dan? You came from very humble beginnings. You mentioned your father there and kind of growing up in the countryside Earlier. Is money what you thought it would be?

[Dan Fougere]

Great question. So even though I had, I was part of four IPOs, the last two, which were the life changing ones, you kind of like, you have like car changing, kitchen changing, house changing, and then there's life changing. It took me both. Medallion DataDog happened in 2019 and then you got a six month lockup. And then I was an executive officer at Datadog. So that was on a automated selling. Like you can't just say I want to sell all this stock, you know, because then it gets published, there's a problem, you create a spreadsheet and the bankers just automatically sell. So I didn't have all of it until like 2021. And so at that point I was 50 years old. Not only was my dad a cop, but for a lot of my time, both my parents were unemployed. I had a lot of debt. Every time I use my credit card now, I still expect it to be declined every time because I just had such a long period of time where I defaulted on my credit cards and everything. It took me until I was 50 years old to make that money. Thank God, because I was fully formed, I would say, and I could see how making a ton of money can distort reality for people.

[Carlos]

Unpack that. How does it distort reality for people?

[Dan Fougere]

Well, when it comes in a way like it did for me, it's all public. Most of it's public information. Anything I sold while I was CRO of Datadog is all public information. And so it's almost like a supermassive object distorting space time. And so your idea of like, what's a lot of money? I don't know. Well, if you just made, if Yesterday you made $67 million dollars, like and just if that much money went into your bank account yesterday, then in that period of time you're like, I don't know, like what? I used to know what a lot of money is and there's a little bit of that during that period of time. What I've found is afterwards you're decaying, sinusoid gets back to steady state. And now it's like, okay, I'm back to reality. But during that period of time, it's like a black hole.

[Carlos]

$67 million. That's a lot of dollars.

[Dan Fougere]

That's crazy. I know.

[Carlos]

Okay, so the point being then, does it make you happy?

[Dan Fougere]

I think some of the changes in your life certainly relieve previous stresses.

[Carlos]

What's the biggest ones?

[Dan Fougere]

So even at my time at Medallia, so when I Went to Medallia. I was at BMC before, all of a sudden I went back to a startup from the cushy confines of the big big company and I was making less than half as much for an annual salary. As I mentioned, I got three babies. I just had bought a house that was twice as expensive. I thought we were going public in two years. Sequoia backed company, great board. Four years in, I had been eating into my savings. I ended up paying a bill with a HELOC check. So I paid a bill with basically a loan against my house. I'm like at a breaking point. And this is just where it's like your expectations on. And this also gets into a conversation about letting your employees get liquid and doing secondaries, which was not happening there. So very stressful. And also like I said, like I told you about, we had the cold call into COOs, CEOs, not even it like the people running big companies and these are big chunky deals. It's not like you're getting like 100 deals this quarter, we're getting like 20. So it's a very stressful time which is kind of goes back to why would you do it again if you didn't have to? At least that period of time, that growth period, especially for a company like that where you don't have the PLG and you don't have the wind at your back, you know, and you're making the wind.

[Carlos]

Sorry, it's too interesting. Forgive me. For public. You said 67 from Datadog, what was Medallia?

[Dan Fougere]

Well, Datadog was a lot more than that. But Medallia, how much was Datadog? Well, it's all public information, so generally speaking a CRO is going to have like 1%, so something like that. And Medallia was not in that category, but it was still life changing. It still was like normal crazy money.

[Carlos]

I do want to touch on an element though, which is important because we have so many PLG founders that listen and you said something great before, which is PLG is great, but PLG with a world class sales org is better. I read that and I was like great, but when should you layer on the world class sales org to the plg and how do you advise founders on that?

[Dan Fougere]

Maybe one way to answer it and I'll answer it in other ways as well is as the founder, if there's that voice in your head or that feeling in your stomach where you're like, I wish I had a better salesperson right now. I wish I could break into the enterprise. I wish I Could go up market, market. I wish I could do three year contracts instead of month to month. I wish I could do bigger deals. I wish I could sell multiple products instead of one product. Whatever it is that voice went off in your head, it's probably time and it probably was time before that. Because the other thing I was thinking about, like if you're running a race, like you're, you're a runner and so if you're running a marathon and you don't hydrate until you are thirsty, it is too late because you are dehydrated and it's going to take a long time for yourselves to be able to get that water and by that time might be too late. I think a general feeling that yes, the product and the product like growth motion is super important. Of course it is. And I'm going to also build another channel of revenue generation through excellent sales just like I have excellent product. Like when I went to Datadog, people didn't want to go there. Like recruiting was so hard and part of it was a reputation that it was a, it was an engineering company, they didn't respect salespeople. And some of it was true. Right? I mean that's why I wanted to go there because I thought I can fix, I can make a great sales culture, but I can't make a great product in engineering culture. So I'm going to go to a product and engineering culture and I will build a great sales culture because those two things together will be more powerful than two plus two equals five. Right. And that was the hypothesis and that's what worked out to be true.

[Carlos]

How do you make a great sales culture?

[Dan Fougere]

I think you've got to have the vision and the vision is that we will be great. That this is going to be what I said at I put a mission statement up that I stole from one of my mentors at Medallia and I iterated a little bit at Datadog that we will have a legendary sales team team that will be known for making great money, making life changing money, being best in class and having, and having fun and that we will learn more. You will learn more and become better at your job during your time working on my team than you would have at any other team during that same amount of time. You will make life changing money and you will never have to look for a job again because the halo of our success will be over your head for the rest of your career and people will seek you out. That was my first day. I said that to everybody on the team. I Also said we will do $120 million next year and we will do 240the year after that. And we will have the most successful IPO in the history of New York. I also said that all in the first week or so. I got in trouble.

[Carlos]

Do you actually believe that at the time or is it a bit of self inflation just to inspire the team?

[Dan Fougere]

I wouldn't have said it if I didn't believe it. But of course that was also. Anytime you put yourself out there, like the first time you told people you're going to run a marathon, you're like, am I really going to run a marathon? That's that. But I just told people, so now I have to do it. There's a little bit of like burn the ships. I'm putting a stake in the ground. We are doing this and I'm telling the whole world and I'm going to commit everything in my life to making this happen.

[Carlos]

What are the most common ways sales cultures suck? You've seen a lot of internal companies.

[Dan Fougere]

You'll let underperformers stick around. You don't have a vision for greatness like I just described. You don't hold people accountable for performance. The leader is not in the boat with them. The leader yells at the scoreboard at the end of the quarter or end of the week. How come you didn't get more meetings? How come you didn't do this? Like, you should have been in it with them. It shouldn't be a surprise at all. And you should know that because you were on the calls, you were in.

[Carlos]

The meetings, taking them one by one. Underperformers. How long does it take to know whether someone is a mishire and how long do you give them?

[Dan Fougere]

Human nature is to give them too long. Long. The saying is like, fire fast, higher, slow, fire fast. It's hard though. These are. That's why being an advisor or a board member is so valuable. It gives me the ability to give better advice because I'm. I don't have the pressure on me, you know, to hit the. Hit the headcount targets every board meeting. When you're in hyper growth mode, like going from 100 salespeople to 200 salespeople in six months or whatever, it's so hard. Like you gotta hire all over the world. You got to try to have quality control. But if I pull back and say there's the same thing, like your instinct, your gut tells you, oh, I think I have the wrong hire here, at the very least now you need a process to see for sure can this person do it? You probably need just from HR coverage perspective, you want to have like a performance improvement plan documented.

[Carlos]

The minute someone's on a performance improvement plan, it's kind of a. I have.

[Dan Fougere]

Seen some people pull out, but most people do not. If somebody is just like a train wreck disaster and you know it, just pull the trigger. If there's somebody that you can see that they have. If they only did these things differently, I generally want to give them a chance to do it. It's a short timeframe and I want to see is their leader showing them like, we might have a bigger problem if it's a rep. Well, maybe. What's the leader doing? Does the leader have these skills? Is the leader, is their behavior the behavior? I want to be scaled across the team. Can they tell them what to do, show them, give them feedback after they do it and confirm that the person now does it and has improved. So at least we have that process in place to see. I've given you guidance, I've showed you how to do it. I've given you feedback. Can you iterate and improve? And if not, then there you have your answer.

[Carlos]

You said about holding people accountable to numbers. A lot of people are missing their numbers right now, Dan, and it. Todd, how do you advise leaders and sales leaders to keep morale up when sales teams are getting battered?

[Dan Fougere]

They should be in it with the people. Especially when times are hard. Like as a leader, when times are hard, you got to bring them up, and when times are good, you got to bring them down. Don't get too high on yourself when things are good and don't feel too bad when things are going tough because that'll affect your performance. And so you should get in it with them and see what is the problem. Do we have a product problem, a market problem, do we have a regional problem, or is it a person problem? And if you've gone through all that and you're just like, I don't know the answer yet, but I do know it's not a person problem. I think there's like, probably a whole set of things to do. First of all, being with them and understanding where the pain is. It could be the deals are coming, but they're not coming soon enough. So if you have some financial pressure, there's some things that you can do to be able to alleviate some of that financial pressure temporarily.

[Carlos]

Like discounting?

[Dan Fougere]

Not like discounting. Discounting should be. These are two separate topics. You know, you could even like give some payment ahead of the deal's closing, something like that. If they're doing all the right things and it's just like they're building a territory, they're building their pipeline, it's taken longer than you thought. There's a, there's a variety of these scenarios. Right. But the one scenario I would not necessarily say, if you've got, hey, we were growing at 100% a year, now we're growing at 20% a year. That's a whole different thing. And now we've got a bigger set of problems to deal with. This is not an individual person problem. This is a systemic issue that we need some like major surgery. And I've been in both of those scenarios. If you wanted to go down at discounting, you want to go discounting or you want to?

[Carlos]

Yeah, love to.

[Dan Fougere]

I would as a general rule, limit. I want as tight a control around discounting as possible. I don't want, for a number of reasons, without the right leadership and even sometimes with the right leadership, salespeople left to the left, to their own devices will peg at maximum discount 100% of the time. That is not how we drive maximum valuation. That's not how we protect unit prices for a long term business. And if you're in a consumption business, if you are going to the lowest discount already, when they have the smallest amount of spend, when they have quadrupled 10x to their spend, they're going to expect bigger discounts. Like it's always going to be expected. Right. So the more you can have discounting be controlled higher up in the leadership chain, the better. And we were always trying. When I got to Datadog for sure, I was working with product all the time on how little can we discount. You get to a place where if you start losing deals, hopefully we never got to a place we were losing deals. We could tell that we were close to losing deals or the friction in the process was such that we knew we were at the limit. And so, okay, that's where the discount should be and we're going to try to get better by selling better value by coming up with more products. But in the meantime that's the limit and we're going to hold it at like CRO CPO level and that way we also have the right data because if you're leaving up to like 100 different people who to decide what the discounting should be, that you have no standard to know the data is the same because some people may be approaching in a vastly different way.

[Carlos]

So you shouldn't give independent Authority to sales reps to say, listen, Dan, my customer, I know, I know it's tight for you this quarter, listen, we'll do a 10% this quarter to make it a little bit easier for you. We really appreciate the partnership.

[Dan Fougere]

I never have a problem talking about deals with people on the team. So you can call me, slack me, text me, call me, basically 24 7, I got to sleep, I got to eat, I got to work out. Besides that, I'm yours. We can talk about discounting on deals. Sometimes automating something is not the right thing. Thing making less friction in discounting. I would rather have the sales team resisting discounting to the customer instead of taking that same energy and effort and trying to jam me as the CRO for discounting. Like, we got to protect the value of the product. And if it takes like one more day to like come back to them versus me knowing that at scale we have just protected the unit price because everybody shares, people talk. And you know, whether it's other sales reps talking about the discount they got, customers talking about it with other customers, I think you want to hold on to that thing and manage that and make it not a source of frictionless.

[Carlos]

Dan, does customer validation on logos really work? And what I mean by that is we have Dropbox and Uber and Facebook and Pinterest and so everyone else goes, oh, wow, they must be legit. Or does it not really work and everyone buys in isolation.

[Dan Fougere]

You gotta have it in your first conversations and first meetings, right? To have some credibility. You gotta have it. If you have it. If you have it and you don't tell people, then you're leaving something on the table. The more that the skin of the onion gets peeled back, the more substance you're gonna have to have.

[Carlos]

But should we discount for customer testimonials?

[Dan Fougere]

Yeah, I don't think so. People do it because you're delivering value for them and because you build relationships with them. And I wouldn't want to trade economics for non economic support.

[Carlos]

When it comes to hiring, I think most founders actually really fuck up sales hiring. When you think about lessons from hiring great sales reps, what are your biggest lessons that you know now about hiring reps that you wish you had known when you started?

[Dan Fougere]

First of all, I think when I started, it's almost like Moneyball. If you ever saw that movie or.

[Carlos]

Read that book, great movie, love it.

[Dan Fougere]

Right? And so back in the day, they were were picking baseball players because they had a good jawline, because the guy's wife was pretty mind boggling but that's how they were. Scouts were picking baseball players. There used to be some of that in sales. What I would say is they come in all shapes and sizes. Also for each company there's a little bit different. Like at Medallia, we needed somebody who could show up and have a meeting with a C suite exec and didn't need to get into technical details because it was not a technical sale sale. It was a. Hey. We envision a world where customer companies are loved by their customers and employees. My mom can get behind that at Datadog super technical sale. So I would ask people, I wanted to make sure they could handle the subject matter. So one time. So one thing I might ask is I generally ask this all the time anyway. I'm going to go backwards. I want to know your life journey. I want to know your life trajectory. Where'd you grow up? What'd your parents do? What were you into in high school? What's the highest level math you ever took? I'm just getting a. I'm getting a read because for example, in the US if you are reasonably good at math, you will have touched on calculus or pre calculus at the end of high school. If you're not, then you didn't. And so I'm just getting data points around what you're good at and your trajectory. Do you continue? Are you making decisions based on going for something great, based on a hypothesis that's educated or are you just going wherever the recruiter says you should go and are you sticking? Because especially in a what you want.

[Carlos]

People who are good at maths. Because I'm shit at math, but I can tell a story like no one else. And I don't think mathematicians tell stories.

[Dan Fougere]

It's a data point for something like a datadog or a blade logic. If you need to get into the guts of a technical sale, then understanding technical concepts and being able to articulate how they work, like how the machinery works is valuable to help you tell that story. Something like a Medallia salesforce. A workday. Who cares? It's a. I can help your HR department work better or your customers can give you feedback different concepts.

[Carlos]

And so we have this line of questioning any others in terms of how to discover detect the best.

[Dan Fougere]

I personally look for discipline in salespeople because we're asking you to do hard things. Like my teams, I would say are different than most sales teams and that's why we get different results like the outbound, qualifying, accountability, accurate forecasting.

[Carlos]

Do you warn them ahead of time? Like I'M going to beat the shit out of you and this is going to be the hardest job.

[Dan Fougere]

But I don't. There's something in it that says, like messaging that this is not going to be a sit back and enjoy the ride kind of team. I don't think of myself as beating the shit out of people. I would not do that. Like, I get it.

[Carlos]

I mean it more in the way that like this is going to challenge you in a way nothing, nothing ever has done before. You will get calls on weekends and we are going to build something amazing. But do not come if you think this is going to be easy.

[Dan Fougere]

They probably get that through this, through the process. And as the CRO, I have other people who are the hiring leaders and they can share their stories. It's just like, hey, this is the hardest place I've ever worked, but this is the best place I've ever worked. I feel great about myself. Like for example, when we would do club trip trips where the significant others come on the club trips, I had so many spouses and significant others come up to me and talk to me about how happy they were about how their significant other has become a better person, has become more fit, they're a better father or whatever. All this stuff kind of translates into your life too. Do what you say, say what you do, deliver on the results, do the hard work, transparency, accountability, consistency, all that stuff to me ends up making us better people as well.

[Carlos]

How do you detect discipline in sales candidates you're interviewing?

[Dan Fougere]

Well, fitness is one thing, it's not universal. But one guy who is phenomenal, who is at Medallia, he's into video games and music. That's his world and he is great at those things and he takes them seriously. And it's a little bit of a different model doing something hard and sticking with it. So the other thing is, if you were at a startup, anybody who's been at a pre IPO company, that's done well for sure, but you're going to deal with some very hard times. Like something things are not going to go the way you thought. It's going to be harder than you expected. Did you stick, are you one of these people who leaves every 18 months or were you there for the full four plus if you got a four year vesting cycle, to me it's like a getting your university degree. Did you stick and stick it out and make it?

[Carlos]

I always say I hate bouncers, which is the one year, one and a half year, One year, one and a half year, one year And I'm like, what have you actually done? The onboarding was three months. Your off boarding was three months. You were there for six months fully.

[Dan Fougere]

Fortunately, I made one mistake and I got out in three months because that's how long it took me to find another job.

[Carlos]

What were the signals that you had made a mistake?

[Dan Fougere]

It was a little bait and switch. They told me that I would have headcount to hire and then they wanted me to be the rep. And there were a lot of things like that where the things that were said were not true. And if we're in the honeymoon phase and you're already telling me things that are not true, get out. Because it's only going to get worse.

[Carlos]

Should we do sales demo tests in the hiring process? Do we do take homes case studies?

[Dan Fougere]

I always have them do a test and the test involves presenting back to us. And I try to your company, their.

[Carlos]

Company, another company, try to do our company.

[Dan Fougere]

Here's where I ended up is that I want them to sell the company that I'm at now. I want us to give them a company to sell to and I want to give them like three days and come back and you be the rep. It tells me a lot based on. In some ways we found that kind of like the perfect amount of time to spend on it is like three hours because it's enough time to do the job. If people who spend less time, their quality of their work output is probably not going to be good enough for our team. People who spend more time maybe take too long to make decisions and get the work done. So they're not going to be able to move as fast as we need to. It tells us, can they get out there, do their own research? Are they a compelling presenter? Do they get it? Would we buy from them? Do they want the job enough to go do this really hard thing?

[Carlos]

Can I ask you just one final one, Dan, which is like, I have so much respect for you and when I hear the journey, it's like it all seems to have been like up and to the right. Carlos told me there was one moment in particular which was not up and to the right.

[Dan Fougere]

Yeah.

[Carlos]

Which was when you moved to the west coast for Medallia, bluntly were like on track to be CRO and then didn't get it. Can you talk to me about that and how you learned, developed, grew as a person from that?

[Dan Fougere]

Well, that's like the deep tracks right there you went, you found out some, some juicy stuff. Spicy. Yeah. I mean, you know, I gave you some of the background about Medallia, I put my heart and soul into that place. We invented how to sell Medallia. They did not have any kind of repeatable process before we got there. We drove that thing, got it to. We're doubling year over year. Got it to, like in the 200 million, ish, 250, it had taken them 10 years to get to 25 million. And a few years later, like a 250. And through some brute force. And so a few things happen. Qualtrics caught up to us because they were out developing us. They're out. Their product was innovating much faster than ours. We were spending money like crazy. The burn rate was unbelievable. And so they brought in a CFO to try to control that. They made too many changes to the terms of the deals. And all of a sudden, growth, growth, like you could feel deceleration trauma. Now, I'm not saying sales didn't have anything to do with it. We weren't perfect. I would never say that. But we were doing pretty great. And all of a sudden, we weren't doing pretty great.

[Carlos]

Is that fucking frustrating?

[Dan Fougere]

Oh, my God.

[Carlos]

It's nothing in your hands. It's not even market, market. But this is like another function's fault.

[Dan Fougere]

It was tough, man. It was tough for everybody. And at that time, Scott, who was a CRO, wanted to punch out. And so I thought, hey, I'm gonna move. I'm gonna move my family, of my wife and our babies to the Bay Area. I'm running towards this thing. I have a plan. I believe I know what we can do to get us back on track. Initially, I was told I would get the CRO job. And then I was told I could win the CRO job. It taken them something like a year and a half to hire the CMO recently. So I was like, okay, I got some time to run. I'm going to make amazing shit happen and I will win this job. Because I was very confident. I was the best person on the planet for it. And I would say now that I absolutely, of course, was. My opinion didn't matter quite as much as the other people's opinions. I went there having been told I could win the job. Things didn't feel right. I found out back channel that they had already made up their mind that they were going to hire somebody else a week after I had moved there. So gutted, man. Just like. And here's the other. Here's the other thing, because it's like, why don't you just quit? Well, I got four years of Equity, more money than anybody in my family for as far back as anybody knows has ever made combined. And I don't have enough cash to exercise. If anybody's listening that doesn't know this stuff, that means 90 days after I quit, it would all turn into fairy dust. I couldn't just quit. That's how I felt. They ended up bringing somebody on top of me. And I got some really good advice from a mentor who's a phenomenal person in the industry. And he said, this is an IQ test. You gotta get another job. And I just was like, I don't know how I'm gonna find the money, because I had to come up with 2 million bucks cash or more to exercise the options. And I didn't have that. And so I was very distraught. I had a really terrible meeting. I was on my way home and the great and powerful David Acharya called me and he said, hey. First they wanted me to come be the number two guy to Carlos at Mongo. And I was like, I've already been the number two guy. I need to be number one someplace. And then Dave said, well, too bad you wouldn't move back to New York because I'm on the board of this hot company called Datadog. And I was like, I'm not moving back to New York, but. But I already had plans to be back in New York for Thanksgiving the next week anyway. And so if you ever saw that movie the Rumble in the Jungle, or I can't remember, it's George Plimpton, maybe it's about Ali versus Foreman and the fight promoter, Don King, he told Ali he had Foreman, he told Foreman he had Ali, and he got them together that way. And that's what Dave did with me and the founders of Datadog. And so he set us up. I had no intention of. Of moving back to New York. I did not want to get back into a technical sale. And I didn't even prepare for the meeting. And I showed up at the New York Times building on the 44th floor, and I met Olivier and Amit. And it was a one hour meeting, and three and a half hours later with every whiteboard in the office filled, I was like, these are my people, these guys. I was going from a company where people were kind of being made to feel guilty about wanting to have an IPO and make money to a company that. That they had a chip on their shoulder too. Because the Datadog founders were told, nobody wants a monitoring product. The cloud will never take off. You can't build a company In New.

[Carlos]

York, dude, their early rounds were unpopular, they'll tell you that. But like, it was not easy to raise the seeds and the A's, they went against the odds. Yeah.

[Dan Fougere]

So people told them they weren't good enough and people just told me I wasn't good enough.

[Carlos]

Did you find the money to exercise the options?

[Dan Fougere]

So while I was doing the datadog job in the beginning, my night job was making a market for Medallia shares. And so I found out that some deal had been done at like 16 bucks a share through the grapevine. This is the gray area because there was no official secondary or anything like that. So I was able to find there was a company called Forge, which was a lifesaver. And through them I found somebody who wanted to buy my shares. I even had to stop some of the people who were disgruntled former employees from saying bad things about the company because they were driving the price down. And then I found another one just on my own. Kept talking to every private equity hedge fundy kind of person I could talk to. I found somebody. They were sketchy, questionable deals that I was doing on my own, but I ended up doing them. And I was able to do the second one through Forge. So at least I had a legit platform to work in and I was able to get enough to exercise. I had my spreadsheet to find that optimum point where I could sell the minimum amount of shares so I could hold onto as many as possible but still come up with the amount of cash necessary to exercise all the other shares. And that's how money I sold. And I was able to do it. I had negotiated a two year term to do it and I closed my last deal to get the cash with like 10 days left.

[Carlos]

What a story. Did the CRO medallia who got the job instead of you, did they do well?

[Dan Fougere]

Nope, not a medallion.

[Carlos]

Dan, listen, I want to do a quick five. So what have you changed your mind on most in the last 12 months?

[Dan Fougere]

Yes, over my experience over the past few years that very junior people can do very big deals with the right training and the right leadership. And that is very different than what most salespeople are taught is that only the most senior salespeople can do the big deals. And at my last company we had multiple people with low single digit amount of sales experience a number of years do million dollar plus first deals. And there's something there where when you look at CAC and you look at efficiency, if you have great leadership with a great sales playbook, great framework Great training. You can get more productivity out of more junior people. It's not just some mysterious thing that the person with the 5 page resume can do.

[Carlos]

How does AI change the world of sales?

[Dan Fougere]

It's almost like when the, when the Microsoft Office suite came out. That's how old I am. I was like, oh my God, my spreadsheet pops right into my email and my word processing and it's all in the same and all of a sudden I could do so many more emails and proposals so much more quickly. As I see it right now, you can do better research on the companies. You can write a more compelling letter prospecting email. You can, you can put a proposal together faster. These things, it's going to make you more efficient and effective, which I think so far are all good things. I know that people are working on other things to try to have the robots do all the selling. Let's see how that goes. You know, the thing about AI is they thought I listened to the AI guys. So the people who actually develop this stuff, right, they said, we thought it would automate the menial labor jobs like truck driving or being an analyst or something, and instead it's making amazing art. So we don't know what it's going to do. But as of right now, I think you want to be able to use it to be better at your current tasks.

[Carlos]

A friend of yours is starting a role as a sales leader at a company tomorrow. What advice do you give them?

[Dan Fougere]

I want to see wins on the board. Week, one month, one 90 days, 66 months, one year. Think about and list out the wins that you're going to put on the board. Game changing hires, game changing deals, instrumenting the business, messaging, efficiency, productivity, all those things. Share that with your CEO. Agree on something that's realistic and go do only those things and make that stuff happen.

[Carlos]

What question are you never asked that you should be asked?

[Dan Fougere]

Who should I hire and who should I fire?

[Carlos]

Who should I hire today if I can only hire one Croatian?

[Dan Fougere]

I got some favorites.

[Carlos]

I need one.

[Dan Fougere]

Oh man. In my mind, Sean Walters.

[Carlos]

Why Sean Walters?

[Dan Fougere]

He has been able to take over Datadog. I've. I hired him as a rep at BMC right after we were acquired at bladelogic by BMC and he went through some super hard times and came out as the top rep and got promoted. He was a leader at BMC and came to be a republic rep at Medallia. Went through super hard times, crushed it, became a top rep, got promoted, went from Medallia selling customer experience to Datadog. Selling cloud monitoring in a hostile environment where even his team was wondering who the heck this guy is and why should he be on top of us and made everybody better. He delivers all the time. He's probably made his number more consistently than anyone I've ever seen. He's super adaptable. He's going to get the job done.

[Carlos]

Dan, I love this show because I can take it in any way and it's a very natural discussion. You've been such an amazing guest and thank you for rolling with my very fluid discussion.

[Dan Fougere]

Harry, this has been such a pleasure and it's been so fun and your like authentic curiosity and interest in what we do is so cool and I'm just glad to be part of it and glad to meet you in person. Well, in person. Ish.

[Harry Stebbings]

We had so much fun doing that one. If you want to watch the full interview, you can find it on YouTube by searching for 20VC. That's 20VC. But before we leave you today, my sales enablement platform is a waste of money. Ever thought that? Well, you're not alone. Most revenue leaders feel this way, watching their sales team struggle to keep up with market, product and competitive changes. Rep spend hours each day searching, digging, slacking, desperately trying to get the answers they need out of their clunky tech stack. Well, that's why Speck, it's AI powered enablement platform, was purpose built to cut through the noise and meet reps in their moment of need. Speck it uses AI to recommend the exact content your reps need to close deals in any tool like Gong, Salesforce or Outlook. It's that easy. If you're ready to give your reps a personalized enablement assistant at their fingertips, take five minutes and discover why. Leading inventory investors like Craft and Felicis are backing Specket as the platform revolutionizing sales enablement. See for [e-mail] 20 as always, I so appreciate all your support and stay tuned for an incredible episode. We have the founder and CEO at Discord on 20 VC on Monday.