Predictable, Scalable, Revenue w/ Ron Gabrisko (CRO, Databricks)

I remember this engineering raises his hand. He says, "What exactly does the sales person do?" I was like, "Okay, we're starting from ground zero." And they were like, "Why do we pay salespeople commissions? You know what I mean? It's like a prize fight. There's one winner. No prize, no fight." Predictable, scalable revenue. Start the go-to-market section of your investor pitch deck with those three words. I don't know why it works so well. It seems so intuitive. Every investor is like, "I love this guy. That's what I want. Yeah, we all want that." But the question is, how do you get there? And a predictable sales playbook is a key ingredient. So many startups get that wrong. They think it's a sales deck. They think it's a pitch deck. And in fact, that hurts the go-to-market system. So with the help of Ron Gabrisco, the CRL over at Databricks, we're going to unpack how to build an effective sales playbook. Because he came into that company when they're about a million in revenue, 50 people, largely engineers and technical folks. They didn't know how to build a playbook, but he did. And nine years later, the company is doing $2.5 billion, and it's worth over $40 billion. Let's find out how he did it. I'm Mark Raberge, and this is the Science of Scaling. So hey, Ron. Welcome to the show. Excited to be here. Thanks for having me. Let's say we'll have you. So I mean, gosh, take us back to how Databricks found you, or you found Databricks. Tell us that story. Yeah, no. I mean, first off, it's been amazing. I've been here nine years at Databricks. I started with less than a million in sales. I met Ben Horwitz, and he was like, hey, I have this little company called Databricks. I met the founding team, and we hit it off, and I was like, let's go for it. Weren't you going, and this being like, there's no way I'm joining this small, sub-million-dollar down there. I mean, I was intrigued, right? Because they had an invented spark. I'm an entrepreneur, so I wanted to do something exciting and fun, and take a big swing. I'd done pretty well before, and I think it's a great story so far. It seemed like at that point, you were trying to figure out how to come up with a commercial package. What is this thing? What are you going to pay for? What's the price? How are you navigating these discussions with, I assume these are like CIOs or banks, or what are we talking about? So we're selling to a lot of, like I said, the tech forward companies. But early days, I hired folks out of my network to go just set up meeting with enterprises, right, and start talking about what kind of challenges do you have, challenges with security, or reliability, or speed-ups, all those kind of things. So a lot of the early service developed based on just, I would say my advice would be go get as many meetings as you can, and I think that's got to be founder-led. Like your early salesperson, like their main thing should be get you in front of customers, right, because that's going to form your opinion of a lot of things that go in your playbook. Hey folks, just Mark here. I want to just highlight something real quick that's happening here with Ron, and it's a reflection on the biggest value you get from your first sales hire. A lot of people think, okay, absolute North Star customer's revenue, and that's fine, like they're going to bring that in. But really, this is a pivotal moment where you're going to exponentially grow the customer insights you're getting into your company. Like up until this point, maybe you're like, you know, six, seven engineers, a product person, whatever, maybe you're having like two, three conversations a week with customers. Now you're bringing in your Ron. Now you're having 20 to 30 conversations a week. And yeah, they're going to pop a couple of customers, but really the biggest thing here is like their ability to reflect and see patterns and then communicate that effectively to you and your team. That's going to help you get to like the perfect product market fit and go to market fit really aggressively. I'm showing you here the signs of scaling overlay on how you optimize each of your go-to-market system designs according to the stage you're at. And if you're in this product market fit stage, you see here, your first sales hire is a combination of almost like an account executive plus a product manager. An account executive in the sense that they can handle those tough conversations, they can negotiate price, they're comfortable talking about money, they know how to move a conversation through toward a commercial agreement. But a product manager in the sense that they can reflect on 30 conversations and sense make and see patterns and communicate to engineering and technical people. It's a rare find, but that's really, really instructive to how you're going to assess and pick your first sales hire for your organization. All right, let's get back to Ron. For us, we saw a big opening in data science. And so that was kind of our first product and how we kind of entered the market. And now we've expanded to lots of other products. Beautiful. So you came up with this data science thesis. You had a package around it, you had a price around it. Did you get it right perfect out of the gate? I mean, you have to experiment a little bit, right? We would look to like, what are the alternatives, right? If you're going to try to do this with other technologies or other methods in the market, you know, you're trying to equate kind of price to value. And early days, a lot of these products are way too technical. Folks will be, or at least some messaging is really technical, right? So trying to simplify that so that customers understand how to use it. Instead of it just being a blank sheet of paper. So are they just telling like the deep technical story and research and you're filling the banks? Are these founders who are very technical actually selling? Are you teaching them to sell? I mean, our CEO and co-founder, when he took over as CEO, it was just kind of close to when I started to, first thing he came to me, he said was, you know, I want to learn how to sell. Teach me how to sell. What did he think it was? What did, you know, this is a brilliant individual. Before he met you, what did he think selling was? You know, I think a lot of technical founders think, you know, I have the best product at the lowest price. I get the whole market, right? You know, why do I need these, you know, kind of evil salespeople, right? But, you know, again, like I think if you have a pretty technical product, salespeople need to teach your customers how to use it and how to get value out of it. So, you know, a lot of my selling early days was less about like, how do we do the pitch, but was more around discovery and asking questions, right? Like when you're trying to build a playbook, first you have to decide like, what's your target market? What's the persona? And then a lot of its discovery, like ask smart questions, you know. Biggest question I get every day. How do you build the next unicorn? How do you build predictable, scalable revenue growth? Luckily, the folks at HubSpot have put together the science of scaling database. Real playbooks from companies that have gotten to the scale of like 40 billion in market cap. The playbooks cover key decisions like hiring, compensation, go-to-market strategy, ICP development, even stuff on AI in sales. All from the folks behind the fastest growing companies in tech. It's not fluffy. It's super tactical. You know my content. You know my brand. It's stuff that you're going to pick up, download, and put to use within an hour. So, head to the description, click on the link, and download your free copy to start scaling your business today. I totally agree. Like almost any super successful sales leader you talk to mentions that this is all about discovery, qualification, opening the questions up front, understanding pain, understanding needs. Not every single seller they hire is necessarily an A plus or thought. So, I don't know if you just had success in finding people that just crush you out of the gate, or did you have some sort of like training wheels or playbook approach to help books? Like you have to build an enablement team, right? So, like one of the things I think that is a mistake is not investing in that up front. You know you got to sit down and articulate. Here's the persona because you're going to have to build pipeline. The key to that first zero to 10 million or 10 to 50 is you need to go touch as many of the right customers as possible. And so, you know, and you might not have an army of sales people either, right? So, focusing them in the right area, pick the personas, these titles, these types of companies, so they know where to go on LinkedIn to connect. And then what's your discovery to just to understand are they the right fit? Is this a potential project? Is this an area you should invest time in? Hey, folks, just mark here. Ron is bringing to life a critical operational cadence at this early stage that few teams take advantage of. I personally call it the film review. And so, what this is, is a bunch of people get in a room at four o'clock or five o'clock at night, and you're going to listen to a discovery call a first meeting with a prospective customer. When you're young and eight people, like engineers, product, a designer, I like everyone in the room. I like it every day. This section, the frequency by which we do this is representing how quickly we're starting to understand the market opportunity and seize it. And so, that's really what Ron is bringing to life here. And I've got an example of like best practices on constructing this film review, right? So, first off, I assign it to an individual. Usually, it's a salesperson and say like, "Hey, you're on the hot seat today. It's Thursday." You know, at five o'clock next Thursday, I need a recording from you that we can all listen to. And then as I go into it, this is less about criticizing the individual, and it's more about understanding the opportunity. Like, do we have our understanding of the buyer journey, right? Do we have the right discovery call cadence? Are we building the right product? Are we seeing some patterns here? And essentially, what I like to do is pre-assign people to give like sort of positive observations on the call and needs for improvement observations on the call, right? So, and then once we listen to the call, I always like the individual on the hot seat to be able to self-assess first. I feel like they're like less defensive if like criticism actually comes up if they have an opportunity first to say what they thought. So, I always go self-assess, then positive feedback, then needs for improvement feedback, and then we open up to everybody in the room to basically discuss on how we executed that call and what kind of patterns we're seeing. Try the film review. Try it every day. It's really going to be a barometer on how fast you can actually learn and understand the market opportunity. Let's get back to run. If you have 10 sales people, or 20 sales people, or five sales people, you know, you need to make a lot of emails, calls, and LinkedIn connections. We want them focused in the right area. You don't want to just spray and pray, right? So, we built out a whole playbook, and I think that's a mistake. I sometimes see when I'm talking to other kind of CROs, you need to invest in that early on, that whole enablement team, and building on a playbook so you can make it repeatable. The messaging, certify on that, train people on it. I'm picturing like an SDR or an account executive figure now. I'm going to make 20 calls today to new people. So, you've outlined like the title, the type of company, where they are. Like, I can go on LinkedIn and find these people. And then, you also talked about things that I can't find online. Like, do they have a need? Is their budget? What are their priorities? What nomenclature did you use to distinguish between those two? You know, a trick that I think a lot of good sales leaders, you know, Wednesdays was prospecting day for us. So, it wasn't just SDRs. Everybody in the sales org, all day, prospecting. Five accounts, 10 accounts, 20 accounts, you need to get into. It might take you 100 calls. Again, prospecting to me is just effort, right? So, and, you know, we kind of break at lunch, talk about, okay, who made some connections? I mean, first is getting somebody interested. Hey, folks, just Mark here. Yeah, another example here of a huge unicorn and the AEs have to prospect. Good job by Ron. The AEs have to prospect. And let me explain to you why. The right approach, just like Ron's saying, is, okay, Bob, welcome to Databricks. This is how our model works. You're in this territory. And, you know, it's obviously in a very quarter to quarter, but for the most part, a third of your pipeline will be generated from marketing. We have a really great marketing team and you'll get a certain number of MQLs. A third of your pipeline will be generated from your SDR. They're going to be cold calling, etc. And you have to generate a third of your pipeline through strategic outbound sourcing. And they probably won't do it. They probably won't do it. And then they'll come back the next quarter and they'll be at 110% a goal and you say, Bob, great quarter. Why don't you reflect? Yeah, I did this well. I could have done this better. Great. Let's look at the numbers. Wow, you crushed your opportunity close rates. You were really great under ACV. And oh, wait a minute, Bob, you only sourced 10% of your pipeline. What happened? He's like, ah, you know, I just didn't get to it. Okay, fine. Next quarter comes along. Same story. Hit the quarter. And oh, Bob, you know, only 5% of your pipeline was sourced by you. You know, I just didn't get to it. Next quarter, Bob misses comes in at 70%. What happened, Bob? Well, you know, marketing didn't have a good quarter and my SDR was off and like, Bob, what are you talking about? Like for the last two quarters, we've been you came in at 10% in Q1 and 5% sourcing for Q2. And now you're standing here, you're still a 5% sourcing your pipeline. I've been telling you forever that's 30%. And now you're blaming marketing and SDRs. Bob needs to feel accountable to his own outcomes. AEs must have some level of sourcing accountability. Great job, Ron. Let's get back to him. You know, we would measure these things. You need, you know, five meetings, 10 meetings a week. So a lot of the qualification came during those initial meetings, discovery and asking those questions. But at least for outreach and prospecting, you know, we were pretty, we had a lot of rigor around how do you identify those companies, research them. And I measured them like every Friday, you know, we would go around the, around, you know, the whole sales organ, say, hey, how many meetings you get this week, how many POCs you have going, we ran contests, you know, make prospecting fun. I think it's the hardest part of sales. But in my opinion, it's the most important part of early company sales. So try to make it fun. That's great. Now you did say earlier that you hired 40 reps in the first quarter. And I know when we spoke, I think there was almost some confusion amongst the team, like the largely engineering team on like, what the heck does a salesperson do? Why do we need them? Is that true? Well, I mean, a little bit like we hired 40 people. I mean, probably half of them are sales people, half of them are sales engineers. And I think, yeah, early days, I remember, you know, we put together a business plan, I give this amazing presentation that I think on kind of our plan and how we need to scale out sales and the playbook and how we need to do the pitch and pricing and all this stuff. And I remember this engineering raises his hand, he says, what exactly does a salesperson do? So I was like, okay, we're starting from ground zero, you know what I mean? So, and they were like, why do we pay salespeople commissions? You know what I mean? Like a prize fight, you know, there's one winner, no prize, no fight. But again, I think as you start to hire professional salespeople that are really good, you know, that culture starts to change your culture a little bit too, from just being engineers and engineering centric to being market centric, like what do customers want? And so we would include engineers, you know, in a bunch of the customer calls too, right? So they could kind of see how it worked. And I would go down to the engineering floor too, and just try to get people fired up. And early days, your head of sales is, you know, for CEOs, that's your partner. You know, I see this a lot, you know, you raise this round, you hire the CRO, you come into annual planning, whatever it is, and you hire like you go from zero to 40 in one quarter, you end up with a lot of failure in there. A year later of those 20 AEs, you hired in that first quarter, like how many worked out? New customers is the oxygen, the lifeblood of a company, right? Like that's going to be all your next year growth. And so, you know, I think it's based on what your growth targets are going to be. Again, I was talking to a CEO, pretty successful company. And, you know, they're probably 50, 100 million run rate, their land's usually 100 grand, you know, he's only got 17 sales people. He's like, yeah, but when I hire them, they have 12, 24 month ramps, it's only 100 grand. How do I pay for this? And I was like, what do you need to do next year? He's like, I need to double the revenue. I go, better double your sales team, right? Like, I think part of it is just you need to add that capacity, because you need to build the market. And listen, some of those might not work out. Like I think I have a good, you know, bar of good network, you know, I know what a good salesperson looks like. So I personally would interview, you know, probably 10 to 20 people for everyone I hired. That's why, you know, I literally blocked out the entire day on Thursday for just interviews and reaching out to people on LinkedIn. I knew what I was looking for. But you have to get that capacity, because even if they don't work out, let's say, you know, 60, 70%. And we had, you know, I think a good rate, because my big thing too is like, I need somebody to make a million bucks. Hey, folks, just Mark here. Unfortunately, this is a requirement. And it's one of the hardest and least favorite part of the job. And that is, if you're not moving out under performers, you're not going to be a top team. And Ron's kind of bringing this to life. So let's frame a couple of things here. First off, the average turnover on a sales team across the industry is 40% a year. That's not good, no matter how you cut it. You run the Excel models on that and assume 40% turnover. It's just really hard to build a good business on that. So even though that's the average, we got to do better. 0%, it's not good either. It's just you're not that good at hiring. You can't be. If you got 0%, your cores are too soft. You can get way more out of this team. So I like to target between 10 and 20%. And of course, I want it to be as much of as possible as involuntary. It's stuff that I'm controlling. It's just the reality of building a high-performing team. Now, let's also talk about what Ron's walking us through here, which is how do you codify an instrument that? That's one of the advantageous things about sales relative to product or finance or other things. It's very easy to measure success versus failure. And so we got to take advantage of that here, as we're thinking about the way we handle underperformers. We often use a performance improvement plan. So just make that quantitative. You miss your goal two quarters in a row, below 80%. You go on a plan. You have one quarter to get above. If you get above, you're off the pip. If you're below, you're unfortunately terminated. So I like to announce that on the first day of the job. It's obviously not the only thing you say, but like, here's the CEO, here's the product, here's the vision, here's some of the playbook. And here's how the compensation plan works. And here's how the pip works. People never think they're going to hit beyond it. So it's not like a weird thing, but everybody knows how it's worked. So that termination is no longer political. And it's never a surprise. That's going to allow you to have this best practice embedded in your culture without creating a fear based negative culture. And it's not like, oh, Mark didn't like that person. It's just like, yeah, they just lost in the game. And to be honest, they're going to go off and find a job that they're successful in. So the faster we can figure it out, the better is for us, the better it is for them. All right, let's get back to run. The good sales people, especially early stage companies, they ask questions like, okay, who are your biggest customers? What are they buying? But then they immediately go, has anybody made a million bucks and can I talk to them? Right? Because they want to know your sales culture, how hard is it to sell all those things. So you're talking about 200 interviews in that first quarter, you're blocking out all of Thursday. So that's like, you know, because I usually see a couple of pitfalls when you attempt this is like the interview to higher ratios too low. The other typical pitfalls I see are demand gen capacity. Like how are those folks fed? I think I know the answer, but I want to drive into that because you touch on a little bit. There's sales management capacity, you know, in the industry, like I think for enterprise teams, it's a six to one ratio of enterprise reps to manager and inside teams, it's more like eight or nine to one. So if we're going zero to 20, and you're trying to abide by that, or maybe you're breaking it, I don't know, you got two or three managers. So how'd that work? So that maybe we just unpack that a little bit. So I think, you know, number one is, you know, hire great leaders. I think, you know, the number one thing for a good leader, especially at Databricks, but anywhere is like, what's your ability to hire great people, you know, motivate them, inspire them, mentor them. I mean, it's the Achilles heel of, you know, any sales leaders. Once you can't do that, then kind of hate your ceiling, right? So, you know, hire great people and they're going to, you know, help you build out that whole team. Hi, I'm Francis Fry. And I'm Ann Morris. And we are the hosts of a new TED podcast called Fixable. We've helped leaders at some of the world's most competitive companies solve all kinds of problems. On our show, we'll pull back the curtain and give you the type of honest, unfiltered advice we usually reserve for top executives. Maybe you have a co-worker with boundary issues, or you want to know how to inspire and motivate your team. No problem is too big or too small. Give us a call and we'll help you solve the problems you're stuck on. Find Fixable wherever you listen to podcasts. What about the demand gen piece? Because there are a lot of folks fall apart as they haven't figured out how to consistently create leads, demand meetings for the reps, or teach the reps to do it. I'm curious how you kept that in sync so that, you know, 70% of these people are making their number a year later. Prospecting has to be religious at your company. That's why I said, like, Wednesdays were prospecting days. You know, we started doing also free training. I think free training is a great method, especially for these technical companies. So, we would basically invite 30 open source users to the office. And then when we train them on the open source product, we use our product so they would actually see the features. And then we'd get to meet those folks. And a lot of our early sales came out of doing that. So, we expanded that as an event. We started doing Spark Live. So, we did a lot of venting to try to capture interest. I think that's a good thing to do for technical products. Do free training, right? Free certifications, those kind of things. Part of the story was like, you came in and you're doing all these meetings talking to customers. The founders are talking to customers. You all are trying to find product, trying to invent a new commercial product with pricing, messaging, all that kind of stuff. And in the same vein, you're out there doing, you know, 200 interviews in the first quarter, hiring a bunch of leaders with, were those sequential? Or were you kind of like building the plane while you're flying it? I mean, I was into it. The founders were into it. I mean, I'm doing calls with Ali on the weekends all the time, right? It's pure grit and effort. Yeah, I totally get it. But the scale while you learn, because it's like, it seems like, okay, you're burning people on, you're training them on the messaging, all that kind of stuff. But at the same time, you're experimenting with the messaging. And you're with Ali at night, you're like talking to a customer, like, oh, geez, we got this off, we're going to move over here. But gosh, we've already, we spent the last four weeks training 12 reps on this. You know what I mean? How are you putting together the scale with the learning and making them all match? We did enablement almost every quarter, right? So you know, we kind of scheduled that after like, a bunch of the road shows and going to see customers. So we were like, okay, here's, here's kind of initial vision on how we want to pitch data bricks and what's the value and all that. And we taught all the sales people that if you have enough capacity, they're going to give you like, I pitched that, that didn't really work, you know, so the faster you can iterate that feedback loop, the faster you can grow. The culture sounds so disciplined. And I want to go to it, like, all right, fine, 60 to 70% work out a year later. That's amazing. So like, bring on 40 people, 20 AEs in the first quarter, and a year later, you're, you're learning while you fly. But let's talk about the 30 to 40% that did not work out. How do you set the system up so that that sort of happens? Like, how do you, how do you processize performance plans and terminations? To me, a lot of it was on effort, right? I mean, there's competency and effort, like, we're in a very technical space, we hire really technical sellers. I think they're, you know, you know, in terms of general sales, I think our people are really smart and driven. So you have to have the competence for sure. So we hired people that came from big data and came from this space, that learning curve, like, we didn't go hire somebody who had, you know, no real experience. So you take that part out of the learning curve. Did you know, like, two months in, three months in? I mean, you probably have a good idea three to six months in. And so people that are put in the effort and that come from the space, eventually, they're going to be successful. So maybe the first year they had some longer sales cycles. You know, I would say most of those folks going into year two, you know, pretty successful. Again, you know, the cheat code is, I'm hiring for my network. So I know what I'm getting, or I'm hiring from the industry. So they already know the market and the product, right? Can you advise the audience a bit on, like, interviewing a sales leader? Yeah, you mentioned like hiring and coaching, I guess. Whiteson was actually outside of my network. Like, it's funny, you know, you work 20, 25 years and, you know, you think you know everybody, but it's funny. You know, personally, like, I love using exec recruiters for key hires. I think it's worth the money because you're going to get a bigger candidate pool, right? And so if you can't hire them from your network, certainly I'm reaching out to people on my own LinkedIn and trying to get people interested. But I liked exec recruiters. I use Jasper at true quite a bit early days. And I think that's a good part to do it. How do you interview key sales? A big part of it when you find somebody's really good is you got to sell them on the opportunity, right? Because if they're good, they're going to have lots of people after them, right? Aren't people just going to like hook up their buddies? I mean, I'm going to do multiple back channels. Sure. Because you want to avoid the mistakes, right? Hey, folks, just to mark here, yet two points on hiring sales leaders. One is just abstract to any hiring. Backdoor references, back channel. And like, you know, I'm not a lawyer, I'm not an HR consultant. Talk to your lawyer, talk to the HR consultant about abiding by the laws when you do this. And a lot of people do. The one question I love to use, whether it's a back channel reference or a regular reference is, these are the three things we look for in our sales leaders. Can you rank them from strongest to for one, two, three for this individual? Right? So it's like, we look for people who manage conflict well, coach really well, and are exceptional interviewers. Can you, you know, rank that for Matthew based on your abilities? It just forces the refer to just like get out of the constant praise and pick some strengths and not necessarily weaknesses, but like maybe average or slightly below average performance. And you can match that against your read on the candidate so far. If you had a concern around coachability, and this person literally puts like their coaching ability up at the top, then that helps you get over that risk. Right? So try that question. The other thing is, as we get back to, you know, hiring a sales leader specifically, and what they do, remember, they hire, they coach, they hold accountable, we got to set that up and get visibility in the interview process. So that surface is my two favorite questions for these leaders. The first one is, you know, I understand that you hire these types of people at, you know, fill in the blank oracle, Salesforce, whatever, how would you adjust that hiring profile for our company and why? And if you're saying that you're looking for people with high work ethic, how do you assess them on that? All right, so great candidates will just like rattle off, they have their scores scored, they know how they assess for it, etc. Okay, the second thing is coaching. Can you tell me about a common skill deficiency you see amongst the salespeople you've managed over the years? How did you coach people through that? Right? So like, you'll get a remarkable answer on like deep diagnosis with effective coaching methods from people that are good. Right? So they got to hire, they got to coach, hopefully those are some insights on how to interview and assess where these candidates are good. Let's get back to Ron. I want to hire the best in the market, right? And again, sometimes I might not be able to get the best of the market, but I want to know who that is for our stage and our company and our market. And I'm going to go try to target those people like I'm very specific on, you know, like, especially now, like, I'm like, I want the best person on the planet for this role. That's great. Going all the way back nine years of that discussion with Ben Horowitz. I'm sure you're glad you took it. Congrats to the foresight on that. And I know Databricks is really glad they found you too, you know, the genius that you walked us through and set it up. Thanks so much for coming on and walking us through it. Thanks for having me, Mark. Yeah, you bet. Keep it going. Congrats so far. All right. Thank you. Thanks, Ron.