Speaker 1we're in the q2 board meeting we have a huge decision ahead who is our next sales leader we're sifting through the candidates and one person says ah they're too big company what does that mean too big company i mean i agree i've seen that as a major pothole as we deflected these enormous trillion dollar businesses and the context is so different but there's also a ton of successes and today we talked to one of those jeff perry is the cro of carta when he joined them six years ago they had about 50 sellers and 400 customers today they have 40 000 and he was that big company leader but as he says he checks his ego at the bottom of his head and he says i'm not sure if i'm the right person to be the leader but i'm not sure if i'm the right person to be the leader
Speaker 2what works or not. For us, Industries became important about a year later because we started to get signal on, well, there's two examples of that. Number one is healthcare life sciences and biotech. The amount of funding that those companies were getting in that time period was really incredible. So we knew that Carta was a perfect fit for them. So we started dedicating a team or reps first and then a team to that segment to make sure that they better understand the industry lingo that they would need to be successful. And understanding the speed to fundraise and the speed to IPO that a lot of those firms were going through at that time. And those are signals like you get through the data. The second example of that is during that time period, about 10% of our business was coming from LLCs, not just venture-backed C-corp companies. And so they would call us inbound and say, can you help us with this ownership tracking problem? And at first we were like, well, I'm not exactly sure we can, but we're not going to turn you away. So let's try. Over time, I bring that up. Because over time that became our third business unit because there was so much demand from this LLC market. And then how PE started to be so influential in that area too. We created an entire business unit around what was just LLC signal that we got in the corporation's business unit three, four or five years ago. And so those to me are like the ways where it's not just company size is easy. Is it like, you know, how many seats or how many employees in our case, we use stakeholders as the benchmarking for creating segmentation. But there's so much more that you can do as you start to get signal.
Speaker 1Can you try to extract that back to give guidance to folks to figure out the right answer for them? Because you were like, yeah, we did these different ones, mid-market one, mid-market two. We realized it didn't work. Like how are you measuring didn't work or did work. And then like, if you were to go in and analyze another company at this stage, like how would you even start with an answer that was closer to right out of the gate? I'm not even sure how you analyze it.
Speaker 2Yeah. It goes back to data. Like you have to have the data set to be able to make the right decisions off of. So I would say whatever your company is, whatever your product is, whoever your ICP is, design your organization around what signals that data gives you. And, you know, I played around this many times at DocuSign. Like, was it 100 employees or less as SMB or is it 200 or less? And that's a huge market because for us at Carta, 200 stakeholders is basically all the way up to enterprise. And so it really doesn't. It doesn't matter what your sort of former experience was around segmentation. Build the segmentation for what's right for the market that you're going after.
Speaker 1Hey, folks, just Mark here. Yeah, this whole concept of organizational design, it's important and more complicated than we actually make it out to be often. This is a really common area of what I call the inappropriate cut and paste or a board or a founder or CEO or most often the CRO. We'll just copy the org design of their last company without regard of the contextual nuances of their current employer. And this org design is a opportunity for everyone to better align the frontline behaviors with the company strategy. You know, in an abstract manner, you basically can cut your team by a couple of different ways. The most common historically had been geography. Which is really complicated. It's really great when a lot of handshakes in person are necessary to close a deal. You just minimize playing time. But other than that, why do it? So a lot of times we go back to that unnecessarily. The one that Jeff's talking about is kind of by company size, which is really critical when you're dealing with what he was saying. Like you've got these huge multinational global billion dollar companies that obviously need to be sold in a different way by a different type of sales. And you can't just go in and say, hey, we're going to sell this to a company that's going to be able to do it. And compare that to these really small like series A companies. Yeah, if you have that kind of variation, that's probably going to be a first cut for you. Then you've got like industry. And he gives an example on that. Well, we had an opportunity in healthcare, but the nomenclature of healthcare was so unique. We couldn't spread that across the whole team. We had to specialize a handful of folks that maybe even had experience there or they could learn it. And have the use cases. And that's really valuable when they have extremely unique nuances to that industry. It happens in healthcare a lot. It happens in government a lot. It happens in nonprofit a lot. It happens in education a lot. These are very common cuts. And what gets even more complicated is these could be multi-layered. You could cut the team first by size, strategic versus mid-market. And then within there, you can cut it by industry. So these get complicated. And the bottom line is, let's start with the strategy of the firm. Where are we trying to penetrate the market? What kind of products are we trying to push? And where are the buyer behaviors very different such that it would be hard for one rep to manage all of that? These questions give us direction to the optimal org design for our company. And Jeff's given us a nice working example with Carta here. Let's get back to him.
Speaker 2And so for an example now, like for Carta. We're 25 stakeholders and below is SMB. That's very different than what I had learned at DocuSign and especially at Oracle. And that's okay. There are different businesses. They shouldn't be compared against each other. Take the data to design what you need to get. And then take other metrics from there to see if it's working, right? Like rep productivity. You know, it's easy to test, like, are people busy or not? Like, are they generating their own leads? Do they have too many leads? You know, the individual that I met when I mentioned earlier, the enterprise AE, I mean, he literally told me he didn't have time. He didn't have time to take a break to go to the bathroom during the day because he had half-hour demos stacked up all day long. Like, that's wonderful, but that also gives you signal, like, through segmentation. Or is it, do you need to add capacity through additional AEs in that segment? And can you grow that segment by adding capacity? And then what are the attainment levels within?
Speaker 1How do you balance the inbound versus the need to outbound within the segment? I don't want to, I want to say territory, but it doesn't have to be geography. It could be an industry. It could be something else. Like, this rep gets this patch. And oftentimes there's some level of inbound and then they need to do outbound. And I feel like a lot of leaders struggle to get the person to do, to supplement the inbound with the outbound. I don't know if you ran into that and how you overcame it.
Speaker 2Yeah, we've run into it actually at every company along the way. And it's like, you know, who's the profile that you're trying to hire? And I actually think, like, the core ingredients don't change for across any of the companies. The folks that I work with that are part of inside sales at Oracle. Very much the same mentality as people that I have on the Carta team here. And it's like the expectation set early on from day one from our directors and frontline managers. Like, you're going to get X amount of your leads inbound source, whether that's through demand gen or a referral network in our channels. But there's an expectation of X needs to be sourced by you prospecting and or in conjunction with an SDR prospecting too.
Speaker 1Yeah, here we go. Full circle. Back to a rep. Needs to be able to control their own destiny. This inbound lead versus outbound prospecting is a classic. I don't think I've ever seen a situation at scale where the manager should not be holding the salesperson accountable to prospecting at least some meaningful portion of their quota. 20%. Just like Jeff's saying, like, hey, listen, this is the blueprint. We expect you to get 80% of your revenue from inbound leads in your territory and for you to make up for the 20% with your own prospects. And just so you know, marketing is not going to be able to be that consistent. There's going to be some months where you get there 100% off marketing, and there's going to be some months where they only deliver 50%. It is where it is. But at the end of the day, you're accountable. And here's what happens. The salesperson never prospects. Hey, John, good job. You made it to your goal. Nice demos, good close rates, beautiful sales cycle. I just have one concern. You were supposed to create 12 opportunities last quarter outbound, and you only did one. I'm just really worried. And John's like, oh, it's fine. I'm still making my quota. Next quarter. Hey, John, good job. 120%. Great job. Great sales cycle. Great close rate. Great discovery. You only had two outbound opportunities, and you're supposed to have 12. Yeah, you know, whatever. Eye roll. Next quarter. John misses. He comes in at 70%. Oh, John, what happened? Marketing. Marketing sucks now. Marketing's why. Dude, what are you talking about? I've been telling you for six months to get your 12. Outbound product. And you've rolled your eyes, rolled your eyes, and now you're missing your sin. Marketing? You had two outbound opportunities. The goal is 12. Control your own destiny. This is just such a really great example on how Jeff is doing that for his team.
Speaker 2And so, also, like, take control of what you control. And you tell me, like, what do you need? Like, you know, do we need to be at X event in this industry? Do you think we can generate leads there? Do you want to work on a? Do you want to work on a certain market? Because you mentioned earlier, like, geographic location. Carto is pretty much early on, Silicon Valley and New York, where all the venture was. That has changed, and it's expanded, so we've started to put focus on other areas around the country now, too. We haven't gone to full geographical territories, but we're very mindful of where the opportunities are in some of these other pockets around the country, too. And that's where we try and enhance our partnerships to make sure that we have boots on the ground in some of those spaces as well. And there was actually no, like, event marketing. strategy at the time conferences like saster that are sort of a sweet spot like for us with founders and funders coming together. No one knew like we should be at these type of things. And now we are and have a presence. And for me, those events are great because many of those people are already Carta customers. So it's a chance to thank them and then also educate them about the additional products that we now have that they can benefit from.
Speaker 1You also, we've talked in the past about that frontline sales manager role and how important that is. And that was another area that you did a lot of diagnosing and change when you came in. Can you talk about how to assess that? Like how do you think about what a sales manager should do and shouldn't? How do you assess if they're good? Like when you were looking for a placement, what are you looking for?
Speaker 2So I think there's some core ingredients. Number one, like I feel like you have to be the teacher. And so if you haven't sold this before, you're going to have a problem and it's going to be difficult. It doesn't mean you have to only have promoted. From within, we've actually brought in some external managers, but there's a ramp period of learning the product and our sales motion. But first and foremost, like I need people that want to be managers and want to be coaches and want to be in the weeds with the AEs without being suffocating. And so I always lean toward like the internal promotions where possible that institutional knowledge is critically important, especially with what we do. I also realize like I'm a benefactor of being someone that gets to come in from the outside. So you have to blend that with both too. And I think you find that balance. And one of the things I'm most proud of is like the amount of tenure that we have across the teams here.
Speaker 1I want to double click into that manager selection though, because you were like, okay, you know, like they got to be a good coach. And let's imagine you are going to make an outside hire in this case. Tell us a little bit about like your favorite assessment questions or exercises to know whether you have a strong manager or not.
Speaker 2Yeah. So actually, uh, probably about nine months after I was on board, I did bring on an external manager. Uh, and I would say, um, it felt very controversial at the time. It wasn't as controversial as everyone thought because we needed just some fresh set of eyes and ears and new opinions and a new look at things. But I think it was twofold. It was like, do I think she will be able to quickly learn the product so she can quickly become the coach for the AEs that will be reporting to her? And then how will she build these great relationships with her peers and counterparts without it feeling like she's the external person being brought in to kind of like show up the internal people, like they weren't doing it well enough. And I was very fortunate of like, I found the right person that had the right type of experience and that wanted to be hands-on. And that also was looking for like career path and future too. And I had also sort of earmarked a few people that I knew, like, these are the folks that I've sort of weeded out. Who's going to not going to be there longer term and who's going to be with me, you know, for the long haul. And now, let's start to build around them. And so everyone's felt sort of their own sense of responsibility and ownership of parts of the business that they could really dig their teeth into and feel like, okay, this isn't the new leader here that's sort of reducing my responsibility. It's leveraging my experience so that I have a career path in this too.
Speaker 1How did you know, like thinking back to the interview with that woman that you brought in from the outside, how did, like, what did you see or hear in the interview that you were like, yeah, I found my person?
Speaker 2Yeah, I think, you know, there's sort of the core ingredients of like, do you know how to run a sales cycle? And like, talk to me about how you manage your pipeline. And these are some, to me, there's like basics now. So when you check all those boxes, then like, let me know about you as like the person and like, what motivates you? What are you driven to do? What do you get excited about? And, you know, some people can be making it up and they can tell you what sounds good in an interview. And that's the risk of an interview. You don't really know what you're getting until you got the person in seat and on board. But I feel like once you, you know, you ask the question, about the individual themselves and, you know, where they've been and where they want to go, you start to, you get them to open up a bit and feel like, is this the type of person that like, I, you know, I use the analogy a lot of teams probably tired of hearing was like, I just need everyone in the boat to have a paddle and oaring at the same pace. And if we're all oaring at the same pace, the boat's going to go forward quickly. And so I also like, I'm not big on just me interviewing. Like I want to bring them in and have them spend some time with the folks that are their peers and understand, like, you're going to need these people to help you be successful because of their experience. Like I can't cram the four years of Carta experience that they already have into some onboarding training for you and expect you to be an expert. So you're going to need them every bit as much as they're going to need and appreciate what you're going to bring to the table for us. And I, you know, I would argue like as a leader, like maybe sometimes that can be perceived as like not too collaborative, but like, are you getting too many opinions? Like, yeah, I do. I like that. I don't have all the answers. I would probably 15 years ago, I wanted to be the guy that had every answer in every room because I was trying to prove myself. Now I'm perfectly comfortable in my skin saying like, so-and-so is the expert of this and bring them in. So-and-so is the extra this, bring her in. Like we need the team to do this. I resigned to this five plus years ago. Like I will never sell Carta cap table software better than a few of these frontline managers who are now senior directors at like VP level. I don't need to catch up to them to prove something to them. I need to leverage their strengths as what they do really well. And then help them with the different experiences that I've gained along the way to help make them more well-rounded and help me cover some of the blind spots that I have not having been at Carta.
Speaker 1What an important leadership gem that Jeff is drawing on in his experience. Yeah. If you're the head of engineering, it doesn't mean you have to be the best programmer. If you're the head of marketing, it doesn't mean that you have to be the best marketer. If you're the head of sales, it doesn't mean you have to be the best marketer. It doesn't mean you have to be the best salesperson. In fact, it's a huge issue. If you are, are you kidding me? You hired 200 salespeople and you couldn't hire anyone better than you. It's not your job. Jeff in this role is supposed to be the best CRO at Carta, the best at building cross-functional relationships with his leadership team, the best at providing a good forecast to the street and his board, the best at empowering and promoting the right people to leadership. That's what he's best at. What a leadership gem. I mean, one of the most common analogies I give all the time to my newly promoted managers are just talk about basketball coaches. Like for those of you don't know basketball, there's three main positions, guard, forward, center. Almost every NBA coach played the game, but I don't think any of them played all three positions. So if this awesome coach was played guard when they played, how can they coach a center? Well, they can coach a center because their job is not to be the best center. They've seen great centers and they know how to compare their center to best center. And they know how to compare their center to best in class. That's your job. And that's a really good parallel for your movement into sales leadership. Your job is not to build eight clones of yourself. Your job is to appreciate the different nuances to get to the goal and bring out the inner talent of that individual. All right, let's get back to Jeff.
Speaker 2And I think there's a big shift in like people's career. And when you go through that moment of like, just because I'm the boss, I don't have to have every answer in every room. And it's like, you know, I'm the boss. I'm the boss. I'm the boss. I'm the boss. I'm the boss. I'm the boss. I'm the They're the knowledge expert in something and like they can contribute in a different way. And I think that helps create this like team atmosphere and culture and the buy-in that you need to run a successful organization. Totally agree.
Speaker 1Huge leadership evolution. That's well said. Let's finish up with the expansion to other products. Usually an ingredient to hyper growth. You specifically said this LLC product. And I'm curious, like, how that even came up? Because I at the board and executive level, there's usually like 10 times more opportunities than you can pursue. It's kind of like, well, do we do this new product or do we go international or do we go upstream or like it is really not sure which one to pick? How did you all wrestle with that?
Speaker 2Yeah, it's such a good question because I think early days, Carta, like Carta is very guilty of that. Like there was so many things to tackle that we oftentimes got so distracted. So in your there's two part two examples I have for you. One is the LLC piece that you mentioned that was born out of like curiosity and interest from the exec team based on signal we got from the outside market of companies coming to us. From there, it became, OK, take the signal you're getting and involve the product teams and say, is there something we should develop differently because of the needs of an LLC? Turns out there is like K1 distributions and things like that. So different features and functionality that make it a completely different product set that led us to say, OK, we have enough signal here. Let's dedicate a product team to building out something totally different. And so that's one way you use sort of the relationship between feedback you're getting from sales and a direct line to product. The other example is in the corporations business, which is where you say, OK, at some point, four to 500, potentially 600 new companies per month, we launch a free product called Carta Launch for companies that are less than 25 stakeholders and have raised less than a million dollars just to get them on the platform and help them grow. And then they transition to a paid plan once they convert. But the real magic in it was taking all the data that we have for all of the HR systems that have been linked to Carta as they onboard and we have all the cap tables in real time. So with that data, what do you do? Well, you say, you know what, if you're going to hire you're a series B and you're going to hire a director of marketing, who better to give you advice on how to comp that person, both cash comp and equity than Carta, since we have all the data through the HRIS systems and through the live cap tables. That to me is like the ultimate cross-sell motion. Like you take all the data you have, you build it in a new product. Now it's like done cross-sell at Carta, figuring out, is it dedicated teams? it overlays. Like we've experimented with a little bit of everything and that's like where we learn and we adapt and we evolve to where now we have roughly 4,000 companies on the compensation product. All these things are like the signals you get from the customer base and from the market that you then take back to product of what you can build into the next product to sell.
Speaker 1And where'd you end up on the sales org design on that? Because on one end you could have, hey, listen, you're a rep, you own this account, you can sell any product in. On the other end, you could be like, hey, you're a rep, you own this product, you can sell it to any of these accounts. And then there's mixes in between and there's advantage, pros and cons of all those designs. Where'd you end up and why?
Speaker 2Yeah. So our latest version is this, and I'm not sure that it's perfect, but it works for us now. And here's why. We have a new business team that is responsible for selling CapTable software. So you have to be a CapTable customer to buy the other products that I mentioned. So the new business team has the ability, you sell CapTable, you have the responsibility to educate the customer on the other products as well. And if someone came to us, they're typically coming to us for CapTable, but if you've been able to share with them the value proposition and they want to explore further, you can sell them the additional products in the first point of sale.
Speaker 1I hope all of you have the opportunity to have such a winning company that you become multi-product. And that's a whole issue in itself, as you can hear from Jeff and how he's still not even sure if he's got it right. And it's tricky. I mean, what we're debating here is like, okay, do you have a single sales team? Do you have a single sales team? Do a salesperson own an account and sell all three products? Or do you have a salesperson own a product line in their territory and can sell into any account? Well, there's pros and cons. I probably prefer the former, but it's not always possible. The nice thing about the former is you just want one person working with an account. I don't want to, if I'm a buyer, I don't want to deal with three different people. And I want all the knowledge about that account, all the relationships, all the politics, all the goodwill, all the use cases in that one person's head when they're visiting. And I want all the knowledge about that account, all the relationships, all The problem is sometimes these product lines get so complicated, it's not possible for one human to have them all. Think about how the product lines that Microsoft sells, they can't do this. Now, on the other hand, if you say, hey, you're in charge of this product on the East Coast and there's a different rep that owns a different product on the East Coast, now you have multiple people going on the same account. Well, that's a problem, but they're experts in their product. So that's the debacle. And, you know, first off, just make sure, like, can some of these salespeople have all the product knowledge in their head? Usually start with an overlay to Jeff's point. Like, have someone own the account. And then when you roll out a new product, have some product specialists and just double comp them for a little while. It's the cost of new product development. And some of the reps will get it and not need the product specialist anymore. And if more of them do, then you probably don't ever need an overlay or a product expert. The reps can handle it. But if you need it, then it gets tricky. And that's where you end up with a matrix environment that you'd see it like Microsoft, Oracle, IBM. And, you know, it's just a reality. But a lot of the sellings happen internally just trying to get face down with an account. So just make sure you think through that riddle. Oftentimes it doesn't
Speaker 2happen that way, but worst case, you've at least planted the seed and educated the customer on down the road. There's more for you to talk to Carta about and how we can help you.
Speaker 1Thank you so much for having me on the show. I really appreciate it. It's been a pleasure. It's been a pleasure having you on the show. I can definitely see your massive contribution here and your commitment to learning and to an empowering leadership model and to not just hitting the benchmarks of the company, but also doing good for your people and their growth. So I just can't thank you enough, Jeff, for coming on the show and dropping knowledge. Thank you so much for joining me. Thank you, Mark. All right, that does it for me, folks. I'd like to thank our showrunner, Matthew Brown. Editing support comes from Pizza Shark Productions. Of course, I want to thank HubSpot for Startups and the HubSpot Podcast Network for keeping the audio on. And by the way, I'm a huge fan of feedback. And so get this, if you're listening on Spotify right now, check your phone, see that Q&A field, that's a direct line to me and our show. So let us know what you think. All right, I'll see you next week.
PodcastTranscript AI