Speaker 1Hey, folks. Welcome to the Science of Scaling podcast. My name is Mark Roberge. I'm very excited to have my friend Kevin Egan on today. He's currently head of enterprise sales at Atlassian, but he is my go-to person when it comes to the strategy to go upstream. In my experience, I often talk founders out of selling enterprise customers, selling million-dollar deals in the beginning. It just takes a long time to work through those deals, close those deals. There's a lot of product development. But once you hit a certain revenue line, going upstream presents an enormous opportunity. Kevin has either led that effort or been a huge part of that effort. Kevin Egan Kevin Egan These companies, Salesforce.com, Dropbox, Slack, and now Atlassian. You've heard of all of them. They're legends. And he is a legend on this topic. So I'm excited to dig in. Let's go. Let's go back, what is it, 25 years to Salesforce? Can you tell us about you going in there, what the company was like at that point, and what it was like to go upstream?
Speaker 2Sure. Well, first, I had the luck to. I started my career at Oracle as a sales engineer, so that kind of played into Salesforce. So in 2002, I was lucky to join Salesforce. I think there was about 230 people at the company. It was about three years old, and it was really after the post-2000 kind of letdown, it was a company that was trying to find its footing. Now, you had an amazing leader, Mark Benioff at the helm, and he had a vision of cloud computing. And everything at that company tied back to No Software and the message around No Software and the benefits of cloud.
Speaker 1I think people are surprised the early days of Salesforce that a lot of the revenue didn't come from the big companies. It came from the SMB, and they moved there over time. Is that right?
Speaker 2Yeah. But I think in the early years, what kept the lights on was that revenue from the commercial segment, which called largely into companies, about 1,000 to 2,000 employees. And so for many years, while we were building out the enterprise motion and the enterprise resourcing, it was that SMB mid-market engine that was funding a lot of that investment.
Speaker 1What does that mean, build it out, build out the enterprise motion?
Speaker 2I'd say first is people, hiring more senior sellers who know how to get into large complex accounts. Also, from a technology standpoint, if you think back in the early days, it wasn't until about 2007, 2008. I think we landed at Salesforce, landed a really big bank, landed a really big insurance company. And those companies had requirements that we hadn't seen before. So I think we actually built out our own data center implementations for those companies. So everything that goes into trust and security, making sure that you're in a position to take on a bank like that, a lot goes into that from a people process and technology standpoint.
Speaker 1Let's unpack, though. So maybe start with the tech and the customer. How do you get that first bank to go first?
Speaker 2Well, it is a land and expand, right? Salesforce likely had built up a very strong reputation within the company. From there, it goes to, okay, if end users love it, how do I, as an IT or technology leader, get more of this if, in fact, the TCO is reduced and the ROI is there? So first is, first, generating the end user love. And then second is kind of getting to business sponsors that will see the benefit to them personally, also to their careers personally, and ultimately to the company, which is, if I give this to my end users, will we be more efficient as a company? Will my employees be happier? And ultimately, can we save a lot of money here?
Speaker 1That's interesting, the land. It seems like that's where a lot of these mid-market products struggle, is you kind of have to figure out that opening. Use case. Just to bring that to life as sort of a data point for us, do you remember what the use case you leaned into as the initial land on that first bank or that first set of banks?
Speaker 2So oftentimes with Salesforce, the first use case that we found was collaboration around forecasting and opportunity management, moving from Excel spreadsheets, from contact databases that were all siloed into a common team database in salesforce.com that allowed everybody to roll up a more accurate forecast. So that was usually the number one use case that got us in the door.
Speaker 1Great example. And oftentimes I hear from companies looking to make this shift that they struggle with that because in the mid-market, sort of that platform value prop was their key differentiator, the fact that you had all this stuff. And you're saying that the key, at least for Salesforce, and I've heard this in across a lot of them, is you have to be a little more precise in your use case and land somewhere. But oftentimes that use case may be not competitively differentiated if it isn't included in the rest of the platform. So are you kind of cooked if you don't have that? You have to kind of reimagine that? Or how do you tackle that situation?
Speaker 2That's a good question. I think it really is what is, if you're going for a land outside of developer operations or the developer tool chain, even in the developer tool chain. But if you're going for a land in a business unit, it does, to your point, have to be a precise use case that you're facilitating better than anybody else can.
Speaker 1Hey folks, just Mark here. I just want to reiterate this really important point by Kevin. I think founders and sales teams that embark on this upstream journey for the first time intuitively don't get this right. They think that bigger companies are more mature. They think that bigger companies have more complex problems. But it's actually the opposite. What is perceived as a simple problem to fix for a smaller company, it's really hard to fix that for a bigger company. And so it's critical as we move from the mid-market to the enterprise that we shrink the footprint of the problem that we go after. We're probably going to run into a brick wall if we try to sell a cross-functional platform. We have to be really precise around a tight use case for possibly a mid-level manager to do a successful land. And then we can run the expand process that he's about to walk us through. All right, let's get back to Kevin.
Speaker 2Faster, better, more engaging, easier to use, and so forth. And that was the case with salesforce.com and opportunity management in the cloud versus somebody's spreadsheet, who was sitting on a hard drive and was not getting updated in real time. And so, yeah, for the land in a business use case, they're not looking for a platform. They've got a what we call a stick-in-the-eye problem. And how do you help me get this, solve the stick-in-the-eye problem and get out of this situation in a short period of time? And then along the way, if you deliver value and people start to use it and start to see the benefit in using it over the old way, then you really can gain a lot of momentum.
Speaker 1Going back to the hiring piece, I'm curious your take on the the difference between a great mid-market salesperson and a great strategic account executive. Whether you're looking at someone that you see potential to promote them or you're interviewing for the outside, what's different about the skills of those strategic account
Speaker 2sellers? Well, I think there's some commonalities between great sellers, whether you're selling into SMB, mid-market, a large enterprise. And that is curiosity, humility, persistence, and just pure smarts, how to put the pieces together. Where I see strength in large enterprise sellers is that ability to put the puzzle pieces together and realizing that it takes time. So there's an element of patience in getting through large complex deals. There's an element of the playing field is much larger. You're bringing in many more stakeholders across a large enterprise than you might be in a mid-market account. And you have to piece that all together and put the business value prop together across a much larger audience. And frankly, be more convincing across a larger audience.
Speaker 1You mentioned for the strategic account seller, you said putting puzzle pieces together, patience, the understanding of the playing field and the stakeholders, developing the business value proposition. How do you assess for those in an interview?
Speaker 2Yeah. So I think the way to find that and to see how people are doing that is really to dig in. You never hire senior people in a enterprise selling role in one shot, right? You're probably going through six to 10 interviews. The final interview that I'm participating in is largely around, tell me who you are, but most importantly, tell me about what win you're most proud of. And we spent 30 to 40 minutes getting into a very deep way with maybe a Fortune 500, a Fortune 1000 company. And what we're looking for there, again, is who are the stakeholders? How many were there? How many did you have to pull together into a single thread of a campaign to win that opportunity? And then where did it get hard and where did you have to kind of ultimately overcome to get that deal over the finish line? In that process, you can ask very specific questions because in many of these companies, there's large sales teams. And the question is, is where they, were they in the driver's seat or where they have passenger seat or, you know, were they just riding along or were they actually driving the deal? Hey
Speaker 1folks, Mark here. I love this comment about putting the seller in the shoes of the buyer and his comment on empathy. That is so key. It's so key in any sales situation from inside transactional to mid-market and then becomes just so important in this enterprise context. It's like, they really need to understand how this buyer thinks about their problems, how they think about solving it so they can create that empathy. And so when you're reflecting on your own sales enablement, your own onboarding for your salespeople, your own sales training, ask yourself how much of that training is about your product versus how much of that training is about. Understand the buyer and maybe some light bulbs will go off on how to optimize that. All right, let's go back to Kevin.
Speaker 2And so you get into very specific questions on, well, tell me what happened in that conversation or, you know, who, who was it that you had on the text basis and was helping you get over that finish line. So you're trying to distinguish from drivers versus passengers in some of these large deals, but ultimately it comes down to take us through at least a 30 to 40 minute deep dive in a deal review. And you get a, a good sense for their ability to navigate and close. I love that.
Speaker 1Let's move on a Dropbox. What was your mission being brought in there? Talk us through that.
Speaker 2Dropbox was a fantastic opportunity in 2012, after 10 years at a salesforce.com. Sujay Joswa took a chance and hired me as the first VP of sales there. Uh, the context was we, uh, I joined in February and in April, we launched Dropbox for business and contextually. We. Dropbox was, was the really one of the first runaway B2C consumer apps, uh, and was adding, I think, gosh, it was like 20,000 net new users a month type of thing. Anyway, they were on a tear from an end user acquisition standpoint. And a lot of people were bringing this, uh, product to work with them. Now box was also launched at the same time and focused off of course, on B2B. So the context was a B2C company coming into, uh, an enterprise environment with a B2C, you know, highly used product. you know, highly used product.
Speaker 1kind of invented to some degree, the PLG, you know, movement of the free, we call it freemium then. And you see a ton of companies now, now, you know, we're going to move on to Slack in a second, but like who started like in more of a B2C type motion, it kind of becomes B2C to B. Yep. And they have a purebred sales-like growth B2B incumbent. In this case, it was Box, who I imagine was like, they would walk into the CIO's office and have. everything the CIO wanted to hear about in terms of geographic redundancy and security admin roles and like all that stuff. And that was like a new muscle group to Dropbox.
Speaker 2Yeah. And it was, uh, well, you think about to run Dropbox as a B2C company by itself. And at that time, when I joined, I think there was about 500,000 users on their Dropbox platform. I mean, imagine just running a platform for 500,000 users alone and everything on a B2C level. That alone is. Just a huge endeavor. Now you add B2B security features, enterprise features that they require to your point, data redundancies, data protocol, you know, protocols around how we handle data, how we separate personal data from business data. And this was a whole new endeavor for Dropbox and, uh, what we would sell on and, and what, what was appealing to our end users was the fact that they saw their employees using Dropbox and enjoying it and being more efficient with it. And so now how could you match. That end user love with an enterprise posture that really worked for the company and, and would deliver the level of trust that they, that they needed to go bigger with Dropbox. And so it was a, uh, technical challenge and it was a challenge of perception in that is Dropbox really in, and ultimately they built a great business product and it's, but it was not easy to do to just kind of layer on all the enterprise and security feature sets onto a, what was originally a B2C, uh, sharing platform.
Speaker 1I'm sure so many PLG companies are about to, or are going through that tension where it's like, you know, sales is there, like we, sorry, we can't close these deals unless we have these features and products is like, I just built two of those features last quarter and you're still not selling. So like, did that happen? And like, what's your advice for that, that team to navigate that friction?
Speaker 2There's the concept of, Hey, show me, you know, why don't you roll up the five to 10 opportunities and tell me what the market opportunity is. If I don't. Deliver this one feature and then you go close those opportunities. Ultimately, you know, that is a, that's a necessary process. So the, the concept that's really important when you get into enterprise selling and taking on enterprise customers is that there is no finish line, right? You look at it today, do you look at what happened, what's happening with GDPR and everything around data usage today? It's a constantly evolving field, uh, when it comes to security and, uh, operations around how we handle data and user privacy and so forth. So what was, uh, an interesting process to go through was, was really working with our enterprise engineering team, making sure that the roadmap and the resourcing for that roadmap, uh, was one that showed long-term commitment and that we understood that there was no finish line and we were going to continually pursue, uh, that next level of requirement that was coming at us from these enterprises. And I think in the very earliest days, it was like kind of that concept. If I deliver you these two or three things, we're done for a little while. Right. And, and I think we learned really quickly that it's not just those two or three things. It's, it's, uh, you're, you're living with those requirements and to, to garner the trust long-term, there's no finish line.
Speaker 1So then you go over to Slack and I, another PLG company, is it, was it the same there? And you were just like, okay, I've seen this before. I'm going to crush this stuff.
Speaker 2Yeah. So after four years of working. Uh, at Dropbox, I joined Slack as head of North America. I think that the key differentiator there, there was a lot of commonalities. One was a kind of a user interface and a whimsical nature of the products that people, users just loved, like it appealed to them, which led to virality, right? So both products had tremendous virality and a new approach on enterprise software. What was a little bit different about Slack is if you think about Slack, the power of Slack comes. Uh, with collaboration and the bigger the team, the more people collaborating, the more power it delivers to an enterprise. So it was not a B2C company out of the gates. Like it was not a one-to-one use case. It was a, it was a many to many. And so their platform and the way they architected everything from sharing and permissions, uh, to, uh, integrations and so forth was really around groups and the bigger the group, the better. So when I had joined, uh, the company was about three, maybe four years old. Um, I. IBM had already had 20,000 users on the system. And so that was something that they aspired to right out of the gates. Uh, it was this idea of teams and largely the bigger the team, the better, because that's where we can deliver the most value as a company.
Speaker 1This is such an important motion process for enterprise selling. Kevin's calling it ABM account-based marketing or ABS account-based selling. Love the category. Commonly misunderstood or abstracted back to being meaningless. And I think when we look at it in this situation, we can really grasp what is different about this motion. What's different is we have drastically different constituencies, personas that we are selling to with drastically different value propositions and potentially different preferable means of communication. He's talking about. The end user, an engineer wanting slack. What's going through my head is they just want faster access to their team to get the information that they want. And then he's talking about winning over the VP of product. Who's thinking more about overall team efficiency and perhaps even consolidation of the technologies that they use. So it's just so critical. To map this out from a methodology standpoint and teach our salespeople, who are the different personas involved in this buying process? What do they care about and how do we talk about our product differently? So it resonates with each one. That to me is the core of ABM.
Speaker 2And that was, you know, departure from Dropbox, which was, I think the original sharing use case that drew an Arash built around was a professor to a student sharing files. Um, so the foundation was a little bit different, but a lot. Of it was, uh, there were a lot of commonalities in terms of approach to making it more usable, more engaging for the end users and just more. more delightful all
Speaker 1right now at last thing wants it on the kevin egan game and that's where you've had enough over there now so tell us about that you know what's the mission over there what's unique about that context i mean that's at a big scale too
Speaker 2yeah it's uh i've been at two last year for two years and uh as you can appreciate i i do love uh product-led growth companies and i think atlassian is the the granddaddy of all uh they were 20 year old company over 20 years now uh with 250 000 customers and probably the best example of creating a really effective flywheel so my job as head of enterprise sales is to we we've selected a certain percentage of our top customers is to create better relationships with those customers so they know us better and we know them better and we can become more strategic and forge longer term relationships so it's something that is fairly new you uh we've we've relied on partners to do this for the most part we have an amazing channel organization uh but we're kind of marrying the channel with more direct sellers to help go deeper with our largest and most complex
Speaker 1customers how do you do that without channel conflict you know don't you have deals where it's like the channel is expecting to get paid but your direct rep put a lot in you know they expect to get
Speaker 2paid we've spent a lot of time thinking about that and in fact uh we have doubled the participation rate of our channel in our uh enterprise opportunities uh in the last two years and the way you do that is uh number one a lot of enablement and education why it's important to have a partner and number two uh we make it comp neutral so it's not meaning it the reps are incented to bring it they're either incented or there's no disincentive to bring in a partner and when you have a partner and again we have a great channel ecosystem we had channel before we had direct sellers and our channel knows our customers our channel has been walking the halls with our customers uh for a long time and they're getting more specialized and so forth brilliant
Speaker 1not always the answer to channel conflict but this comp neutral i love it and a lot of executive teams can't get through the cfo to win this over so what kevin's basically telling us here is when a deal is closed at a traditional business that's going both through direct and through the channel if it's not closed through the channel the salesperson gets paid more and if it's closed to the channel they have to share the commission with the channel partner that was not optimal here and what he's saying is regardless of how the salesperson closes the deal they make the same amount of money and the channel partner makes the same amount of money whether they ran the deal themselves or used a salesperson internally that is brilliant for where elastin is right now from what i understand it's also a great starting point anytime you're starting to dip your toes into channel selling to eliminate that friction now let's circle back to the cfo issue we can't just double cac so what we have to look at it from the cfo perspective is there has to be a number that makes sense generally there has to be a number that like if 40 of the time we pay the rep on a deal and 40 of the time we pay the channel partner on the deal and 20 of the time we have to pay them both that the cac irons itself out and we don't have to deal with these rules that's the exercise we have to walk through with the cfo that we can go to the channel and go to the sales team and say you will be compensated the same no matter what and we can go to the cfo's office and say we've worked out the cac numbers i love what they're doing here let's get back to kevin
Speaker 2our reps are seeing incentive and long-term value for maintaining that relationship with
Speaker 1the partner in the account i love that i love that all right so now we've got these beautiful four cases and i'm gonna do a kind of i guess a lightning round of like i'm channeling someone who's like thinking about going upstream and they want to like pick your brain on these like strategic questions so the first one is how do i know when it's the right time to go upstream
Speaker 2how do you know it's the right time i think it really comes down to your customer's are going to tell you that your customers will be very vocal and they'll find ways to get to the ceo and say we could go bigger if we could go bigger if you started to negotiate legal terms with us if you provided uh more favorable pricing at higher end user tiers if you were to put your data centers in xyz countries uh here is the opportunity for you and here's what you're leaving on the table by not providing the right level of resourcing and technology to allow us to go there so in the case of it lasting at slack definitely there was a customer pull uh to get there in the case of salesforce there was always that appetite to go there it just took a little while to to build out the infrastructure to get there so ultimately yeah it's your customers that i think will tell you loud and clear that the opportunity is there and that you'll see a
Speaker 1significant roi what's the first step like do you hire three reps and an enterprise manager does this sit more in like marketing a product do you like tell one rep to like spend half their time on enterprise and half their time at mid-market and it's like one of your better rep yeah i
Speaker 2think it's i think you need to start with a rep who is focused on enterprise and in the early days that rep needs to be a jack-of-all-trades a renaissance rep if you will doing everything from writing great copy to closing deals which are hard to find but they're they're out there and they're very multi-talented people but they're really there the early reps need to be there as the voice of the
Speaker 1customer yes yes you need the renaissance rep like i don't know why people think this is like they just they're gonna go upstream they have very little experience doing upstream and the first thing they do is hire five enterprise salespeople we can't think that way like go back to the beginning of your business you didn't like come up with the idea start building the product and hire five salespeople at the same time now we know better we have to figure it out we have to figure out what the right product market fit is we have to figure out what the messaging is and then once we do a product market fit we've got a market fit then we can hire the five reps when you decide to go upstream you are starting over you almost need like a little seed funded team including the renaissance rep who's going to have a ton of conversations with the market and be really good at communicating the opportunity back to the r&d team i love this let's get back to kevin
Speaker 2and those reps need a clear line of communication into product into company leadership and into legal and so really the early reps from an enterprise standpoint you know the roi may they may be questionable but it's really are is that are these people the best communication avenues and and can they capture a voice of the customer information to the company and help the company make the decision on whether this is worthwhile for them or not if you're
Speaker 1like advising a board and leadership team and they're like you know kevin i feel like we have a lot of opportunity upstream and we feel like we are getting pulled up a little bit like our customers are saying these things and we want to take that first step but we know that we're going to uncover a ton of product gaps we have to work through we're going to uncover a lot of human skill gaps we have to work through we're going to uncover a lot of process gaps what's your estimate in time from the moment we take that first step with the renaissance rep to the point where we can say to like the wall street you say to say to wall street um we're committing to a you know whatever a revenue line on this year for the enterprise
Speaker 2okay so many companies in this space at earnings call will report how many customers they have over fifty thousand dollars or hundred thousand dollars let's say you want to get to uh uh a couple dozen companies spending over a hundred thousand dollars uh this is a at least a three to five year
Speaker 1journey three to five years now that's probably the reality for like a business of the size of atlassian with the number that's necessary to make a dent in atlassian's top line it's probably shorter for the ten fifteen twenty million dollar business that really wants to make enterprise a line item but it's not a month it's probably more like a year and yet i see so many boards and senior leadership teams who show up at the annual planning meeting and they're trying to go from 15 to 30 but their current motion only gets them to 25 and someone says why don't we start selling the enterprise and they sign up to the enterprise and they sign up to the enterprise and they say okay we're going to start selling it to a five million dollar quota that year with a very little experience in selling to your enterprise you have to be going into that meeting having already run through the experiment cycle having already run through the test learn iterate cycle for probably a year so if enterprise is in your purview in the next 18 months you got to start experimenting now let's get back to kevin dude this is awesome um i'm so excited to see your four-year experience and fourth story on fold here and at last and keep updated on that and i really appreciate you coming on the show and dropping knowledge it's been a pleasure mark great to be with today's episode was written and produced by matthew brown our show is edited by pizza shark productions big thanks to hubspot for startups and to the hubspot podcast network for keeping the audio on hey also we're a new show so if you like what you hear or if you hate what you hear leave us a rating and review over on your favorite podcast player i love the feedback also check out stage 2 capital we're the first vc firm running back by over 500 cro's cmos ccos so if you're an entrepreneur looking to scale your business check out stage 2.capital all right that's it for today i'm mark roberts see you next week
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