Speaker 1- What is the future of outbound prospecting in the native AI era? That is the question on my mind today. And for that, I brought in my friend, Dan Lee, co-founder and CEO of Nooks. They are rewriting the playbook on how this is done. A thousand customers and approaching nine digits in revenue. This thing is real. So I'm gonna break down with Dan when to hire your first seller, how SDRs and account executives are gonna set up meetings in the future, and even how the whole organization works, how you should think about that as a founder. My name is Mark Roberge, and this is The Science of Scaling. Hey, Dan. - Hey, Mark. - Good to see you here in San Francisco. - Thanks for having me. - Thanks for coming out for some coffee. - Yeah, of course. - And you're gonna go to market in the AI world. - Let's do it. - Let's go back to the classroom of Stanford. And I guess before you even talk us through this like crazy story, so when you were doing this project, were you thinking, you know, "I bet I'm gonna be CEO of a pretty big company one day." -
Speaker 2No way. - Really? - I knew some people who were CEOs, and I think a lot of them said they were full-time recruiters. And that was pretty accurate. - Is it? - Yeah, that's pretty accurate. Yeah, I think the most important thing-- -
Speaker 1What percent of your time do you spend recruiting? -
Speaker 2Well, just as a leader, I think I spend most of my time doing my job. You can do everything else wrong and hire a great team, and you can still probably do pretty well. Or you can do everything else right and not hire a great team, and you're doomed to fail. So I think, yeah, as a leader, like my most important job is like building the best team. Started hacking on Nukes when everyone was working remotely. -
Speaker 1This was the project. -
Speaker 2Yeah, this was the project. I was interested in, hey, you know, everyone's using Zoom, is there like a better way to kind of work together remotely? And Nukes started-- -
Speaker 3So it didn't have much to do with demand gen? - No, no, yeah.
Speaker 2Completely, I didn't know. If you had asked me about sales, I would have said, why do you need salespeople? Shouldn't you just build products that sell themselves? -
Speaker 3Such a common perspective. And so many great companies start
Speaker 1in a completely different domain. -
Speaker 2You know, sales tech companies aren't known for having the best engineering talent, because as an engineer, like you think something similar to what I said, right? Why do you need salespeople? And it's not something that you naturally resonate with, but-- -
Speaker 1So you knew what good looked like, especially on the R&D side? -
Speaker 2I think there are a couple dimensions. Like, you know, a lot of people index, you know, on the technical ability, right? You pass like a coding test. And that's like, you know, a very important part. But I think there's actually a lot of other aspects to it as well, in terms of, especially now with like agentic coding. I think like one of the key axes is high ownership. And another is like strong product sense. -
Speaker 1Okay. And do you think those things have changed or like become more weighted in the AI era? Those were always there. -
Speaker 2Certainly. Per person, you can do so much more. - Sure. - And I think ownership around like actually owning outcomes. If you own the outcome, you can just do so much more to drive that outcome. And two, like the product sense, like the limiting factor is taste. It's easy to build like a ton of features. The hard part is actually knowing what's important. We have this like-- -
Speaker 1And is that what you mean by taste? Like define taste in a sentence or two. -
Speaker 2Yeah, well, okay. So I guess the product sense, there's like the two aspects of product. - Yeah. One is the rigorous prioritization. We have this value of do more with less. And it's like, we can do anything, but not everything. And our key advantage is ruthless prioritization. So I think that is that like kind of first principles, problem solving approach, understanding, hey, what are all the options, like rigorously evaluating them against each other and coming up with like key, clear North Star metrics, leading indicators, like timelines and actually like driving output that way. And then the other, like on product sense is more taste. Where it's kind of empathy, putting yourself in the customer's shoes, understanding deeply what they care about. -
Speaker 1Taste. It's the soup du jour of every hiring profile today. What do you look for in an AI enabled engineer? What do you look for in an AI enabled salesperson? Taste, taste, taste. But then you ask the founder, what is taste? And sometimes they're confused. They're not sure. I don't know if they're just copying the market or they just, they just don't know how to describe it. But I love Dan's answer because it takes us back to a first principle in selling that survived the sixties, the eighties, the two thousands, and will survive the AI era. And that is customer empathy, understanding the goals and desires of that buyer and aligning the sales process with it. That is taste, customer empathy. Let's get back to the episode with Dan. -
Speaker 2And you know, there's, we, we, we deal with human in the loop AI and you know, there's not like a one right answer. And it's like, there's a, there's somewhat of like a feeling. There's like the, the feeling of like how you actually use the product. The bottleneck is actually on like quality. And that's why I think taste is extra important. -
Speaker 1How do you interview for ownership and taste those two? -
Speaker 2A couple of questions that I always like to ask. One is when was your favorite experience in your career? And that's always telling because often like for a couple of reasons, one, is their favorite experience has implications on what they're looking for next. - Sure. - And if their favorite experience was in a time where like they had high ownership and they were building, right. It's hard to ask about ownership directly. - Right. - Cause like they know. - Do you like ownership? -
Speaker 3Yeah, exactly. - Yes, I love it. -
Speaker 1Yeah. - But if you say what your favorite experience and it's about ownership, that's a huge green light. -
Speaker 2That, and then the other question that I always like to pair with that is when have you worked the hardest in your career? - Are they often the same? - It depends. It's interesting when, when they're the same, like then it's interesting because, you know, often you work hard in a situation where when you put more in, you see more out. Right. And it's rewarding. - Right. - But when they're different, it's like, okay. Yeah. Tell me more, explain why. -
Speaker 1Yeah. - So. - When did you figure that out? I mean, you're, you're kind of hinting that like sales was kind of really gravitating. It was like, talk us through that, that pivot. -
Speaker 2Yeah. I think we, we felt that we were still a nice to have. Right. Some people. -
Speaker 3How, how did you know? -
Speaker 2So I guess a couple of reasons. One is there are people using it for all these different reasons, but some people said it's a bit better than Slack. And some people said it's a bit better than zoom. And we actually hadn't really tried charging that much, but like when we started testing it, it was like, yeah, it's like, you know, probably charging kind of like, you know, like these other products or less. And we wanted to deliver something that's like extremely
Speaker 1valuable. - Okay. So what you would have just heard, don't take this away from me $1,000 per person per month. Fine. And that's what you're looking for as a signal. -
Speaker 2Yeah. Well, and I think even backing up a step. - Yeah. - In starting Nooks as a project, the first couple of years, we actually didn't try charging at all. - Sure. - And that, - Was that debatable? Or was all the founders are aligned with that? - We just weren't really in that mindset of like, you know, running it as a company. - Right, that's true. - So I think that that's a great lesson where we probably would have figured out much sooner where to focus if we had to start a charging sooner. - Yeah, this is
Speaker 1very interesting insight from Dan on when to charge. The first principles approach in the science of scaling is price for commitment. Don't over optimize on profitability during the opening pursuit of product market fit. It's unnecessary friction. But don't give it away for free because you really, it's difficult for you to understand if the customer's really committed. And what Dan's talking about to differentiate between a nice to have and a must have. So yes, I agree. Dan probably could have accelerated toward his product market fit had he initially charged at least something for the product. Now, one thing I'm learning here that could be a potential evolution. Is Dan is looking for a consistency of a use case. I need to think more about that. I can challenge it to some degree. If we think about companies like Slack and Notion, people use in a lot of different ways. But in the opening act of a startup, maybe Dan's onto something is maybe lots of different ways. Different use cases would take away from our perception of a must have and a nice to have. And when Dan finally found this consistent use case in a highly strategic arena and go to market where he implemented notes and a business that's worth building, there's something there. And that was probably a good sign of a nice to have opportunity. Let's get back to the episode.
Speaker 2And, you know, we had this vision of how do we make people, you know, 10 times as productive and where the collaboration is as a starting point. But we didn't kind of see the path towards that. So we found that sales teams were all using notes the same way and they were all making calls together. So that was pretty interesting. That was like the highest concentration
Speaker 1of why these are psych. They needed the energy with each other.
Speaker 2They just. Yeah, it's it was a lot of junior sales reps, you know, first job at school. Yeah, they're learning how to sell and the way they're learning is by getting feedback once a week from their manager on last week. So, you know, last week, you know, a couple of calls from call recordings. Yeah. And, you know, the way that you used to learn is by being on the sales floor with the team. You watch The Wolf of Wall Street. Of course. Yeah. You know, the scene where Leonardo DiCaprio is making calls and everyone huddles around him.
Speaker 3Totally. Yeah. I think he sells that fantasy, like that phantom stock. Yeah. This great sales movie.
Speaker 2Yeah. Yeah. And that's obviously exaggeration. You know, our company sold real products. But yeah. Yeah. I think we coming in, we didn't really understand like the sales role, but we coming up, we in spending a lot of time with it, we realized, one, this is not a dirty job. Like, you know, we had originally thought you're actually doing real problem solving, like solving human problems when done well, when done well. Exactly. And two, it's this great fit for collaboration because you have all these reps that need to learn, you know, what works and what doesn't work and share best practices. And winning behaviors. And you need this type feedback loop.
Speaker 1So you have this insight. They're making calls together. Now, this is this consistent use case problem that you're seeing. Did you test the willingness to pay? What was next?
Speaker 2Yep. Yep. So then then we started. This was like early, mid 2022, where we said, OK, we're going to focus on sales. Good. Just for kicks.
Speaker 3What was the option to?
Speaker 2We didn't have much of an option.
Speaker 1Yeah, that was that was as clear as all the co-founders. Like, let's. Do easier, stay the course or let's just focus. Exactly. OK. Yeah. Cool. Yeah. There's three of you total.
Speaker 2There are three of us.
Speaker 1How do you make decisions when there is a disagreement?
Speaker 2We talk through it, like understand kind of why each person has that perspective, because we're generally first principles thinkers. We can reason through like, OK, like, yeah, this this approach has these merits, this approach has these other merits. And yeah, we will always basically come to some agreement. And it's maybe like, hey, we try this. And if it. You know, if we hit these metrics, then we keep going. And if not, then we try this other thing. But yeah, we generally come to agreements like that.
Speaker 3Great. OK, so we're moving in this pivot. You're seeing this opportunity.
Speaker 2Then what we had always had the idea of, one, get the virtual collaboration piece working and then to make it smart in the virtual collaboration actually seem to be working where it was growing. We were charging money like sales teams really liked it. We had a ton of user love and we were like, OK, what's the next step? And in going deep on sales, we realized. We realized that the opportunity for automation, like there's just so much like reps are writing emails and making calls and doing research and all these things that I clearly was going to do. And the first kind of piece of automation that we started focusing on was around the call because we had all these reps making calls and notes. We actually had all the data because we were streaming the audio through notes and we realized, you know, they're they're loving notes for this ability to collaborate on these calls, but they're only having like two or three conversations. And in our because there's all this manual stuff, you have to build your list of who to call and find their phone number and listen to a bunch of ringing answer machines and like think of your call scripts and then take notes after the call and log it to the CRM. There's all this like kind of manual cruft around calling and we realized, yeah, we can probably make that a lot more efficient.
Speaker 1How did you detect that that was happening? Did you just like have a mandate that you had to kind of talk with customers every day or were you watching the data logs? Yeah, it was both.
Speaker 2So we actually spent a lot of time. We spent a lot of time with the sales teams that were using notes in the sales floor with them. The virtual ones just popped in.
Speaker 3Exactly. We just hung out with them in the sales floor.
Speaker 2That was one. And then two is we actually started in order to grow that business, like the virtual collaboration, we started cold calling ourselves. Nice. So we were calling sales teams and we realized, hey, this is like kind of inefficient.
Speaker 1Eat your own cooking. What percent of the time were you kind of observing customers?
Speaker 2Definitely the majority, like 60, 70 percent. Of a week? As opposed to building? For a period. Really? Like when we started focusing on sales, we were like went all in.
Speaker 160 to 70 percent of the time observing the customers using the product per week. Beautiful. It's amazing when I talked about the last generation of startups and advise that people do one film review every day. Every night. To sit there and listen to salespeople talk to customers and I'd get pushback pushback from founders like I can't take my product and engineers away from building every night and yet Dan is building this amazing business spending 60 percent of his time watching users. What's your ratio of learning? Versus building my prediction that optimal ratio grows in the AI era because building cycles are accelerated and deciding what to build is the most critical decision, something to learn from Dan and his success with Nooks.
Speaker 2And then it was like, you know, distributed parents.
Speaker 1Yeah, you could predict the next observation.
Speaker 2Yeah, there's a ton of manual work that's reps. Yeah, there's a ton of manual work that reps. are doing today and go to market like in writing emails and doing research and updating the CRM and there's also though parts of the job that are human right like you have to build relationships and you have to have the taste in the actual like solving real customer problems and but agents can do a lot of that manual stuff but you still kind of need that human element so we're building that interface and like that that system for humans and agents to work together. Beautiful. If you think about like how go to market systems are built today you're built around primarily human. human constraints so for example like why does a rep have a limited territory it's because they only have so much capacity in their head to like you know keep all the accounts in context and they only have so much capacity to you know send emails and make calls and go work that territory so that's why they do everything for this you know patch of 150 accounts or like another example why does why does a digital marketer decide what ads your prospects see when probably the sales rep knows better. what message you need to get across to these these people because they spent time with them and they understand the account but it's just not like humanly capable to or like it's not a human capability to go manage millions of real time ads but if agents can actually understand you know sales which is like influencing buying decision changing how people think if agents can actually understand like sales strategy as deeply as a rep and it can you know it changes kind of the constraints and how do you scale now without you know hiring a rep. an army of sales reps but instead by building agents that can automate the
Speaker 1sales all right look your reps only have so many hours to research accounts personalized outreach follow up and talk to buyers doing that work manually across large account lists severely limits just how deeply sales reps can personalize each approach this is the perfect use case for agents I put together a framework that shows you how to use agents to do more of the groundwork giving your reps the context they need to make an army of sales reps but instead by building agents that can automate the sales all right look your reps only have so many hours to research accounts personalized outreach follow up and talk to buyers doing that work manually across large account lists severely limits just how deeply sales reps can personalize each approach this is the perfect use case for agents I put together a framework that shows you how to use agents that can personalize each approach this is the perfect use case for agents that can personalized and
Speaker 2personalized and personalized and they do all the account research and prioritize accounts and then come up with a plan for each account and figure out which prospects a target what messages they need to be getting and then sending emails and making calls and you know can when working the account then that that shifts where agents can now do a vast majority of that and the role of the the human diverges there's like one piece that's defining the strategy they have to do that yeah I think at least right now like that sales strategy piece is not a model capability right it's like models are not as good at persuading people and you know I think that will come but you know today models are not as good at persuading people so you need you know some strategic salesperson to understand like hey what should the strategy be so you need you know some strategic salesperson to understand like hey what should the strategy be so uh and kind of define that so up front
Speaker 1salesperson to understand like hey what should the strategy be so uh and kind of define that so up front looking at all the information that's looking at all the information that's looking at all the information that's presented and then form the strategy presented and then form the strategy presented and then form the strategy whether it's on the prospecting or on the whether it's on the prospecting or on the whether it's on the prospecting or on the discovery or on the demo
Speaker 2discovery or on the demo discovery or on the demo yeah I give this um another way to frame yeah I give this um another way to frame yeah I give this um another way to frame it I give this uh chess analogy so when it I give this uh chess analogy so when you're trying to sell to an account uh you're trying to sell to an account uh you're trying to sell to an account uh it's kind of like this complex human it's kind of like this complex human it's kind of like this complex human game of chess game of chess game of chess where first you need to understand the where first you need to understand the where first you need to understand the board and the board is uh what's the board and the board is uh what's the board and the board is uh what's the situation who are the stakeholders uh situation who are the stakeholders uh situation who are the stakeholders uh what are their problems their priorities what are their problems their priorities what are their problems their priorities how do they influence each other you how do they influence each other you how do they influence each other you know uh who makes the decision who's know uh who makes the decision who's who makes the decision who's who's just an influencer uh and you who's just an influencer uh and you who's just an influencer uh and you can't see the board right um because can't see the board right um because can't see the board right um because you can't see what they think and you can't you can't see what they think and you can't you can't see what they think and you can't see what their problems and see what their problems and see what their problems and priorities are uh uh so you need to kind priorities are uh uh so you need to kind priorities are uh uh so you need to kind of infer it by you know researching on of infer it by you know researching on of infer it by you know researching on LinkedIn and uh looking at their company LinkedIn and uh looking at their company LinkedIn and uh looking at their company website and their news and um you know across what channels, you invite them to an event, or send them an email, and then you come up with that strategy, and then you go make moves, right? You go send the email, you make a call, you know, you invite them to an event, you ask your CEO to do a warm intro, and the, you know, it sounds really easy to have AI write a sales email for you. just like it's kind of easy to push upon. But it's hard to know, is that actually a good move? Because to know if it's a good move, you need to understand the whole board. If you only see part of the board, you're probably not making a good move. You also need to think a couple moves ahead. What do you plan to do after that? After the email, do you plan to invite them to an event, schedule a 30-minute demo, or send them a white paper? 'Cause that probably should influence how you go make that move and send the email. And you need to learn how your best sales reps play the game. And it's different for every company. And there's like these long-tail decision functions. And this type of data doesn't exist right now. Like understanding, the CRM captures what happens, like the outcome of, you know, this email was sent in this part of the deal cycle to these people, but it doesn't actually know why that happened. What was the reasoning behind it? You can see, okay, you move the knight, but it doesn't know what the state of the board was at the time. And the reasoning behind actually making that move.
Speaker 1Now, 10 years, that's brilliant. 10 years from now is a long time though. I guess what I'm struggling with is today, those SDR decisions are generally done by an entry-level person out of college, not a lot of sales experience. So in a way, the bar is sort of low from a human capability standpoint. And I just, my mind goes to like, okay, if a model watched like 200 of these reps do it for like a quarter, I feel like, they might be able to outperform a 22 year old entry level. Yeah. Oh, certainly, certainly.
Speaker 2The general bar increases, right? Where you can do, you can grow without hiring armies of sales reps and you don't need a higher, you know, low quality.
Speaker 1So we might have like a 12 year veteran that's a brilliant at selling into healthcare that is enabled by this tax, such that they're actually doing the prospecting of like, you know, like, what does it look like to be able to do that?
Speaker 2And I think that's, I think it's, I think it's a, it's a, it's a big part of it. But it's like one 100th of the effort. Exactly. Yeah. You, you, instead of you manually having to, you know,
Speaker 1do all the research and send all the emails and make every call, you kind of agents helping with a lot of that work. Yeah. Okay. What a brilliant vision by Dan. It's given me conviction on two observations I'm seeing as the AI era unfolds. Because humans are enabled so well with agents, we reverse the curve on specialization. We go back to an AE, one person, that manages the entire buying journey from getting the meeting, to closing the business, to renewing and expanding. It also gives me conviction that the key metric right now is on increase in selling time. The number of hours per week that our salesperson is interacting with a buyer. The buyer doesn't care what happens behind the scenes. They want a seller that shows up prepared and helps them drive an efficient decision process. I guess the third idea that Dan's vision puts in my head is the skill bar across sellers. The skill bar across sellers will increase. Because historically, we've set up a system so that the B player could succeed. Because we needed armies of salespeople. We just couldn't fill the seats with only A+ players. But in Dan's world, which I agree with, we need less sellers. And so naturally, the talent bar that we can demand from the market will be higher. And I think that's what we need. I think that's what we need.
Speaker 2And I think there's this interesting question. Do you end up with humans orchestrating agents? Yeah. Or do you end up with agents orchestrating humans?
Speaker 1Yeah, because I can like, just to kick it around with you, in a way, there's a buyer that has almost like an RFP, whether it's like really formal, or they have a needs requirements for what they're actually looking for. And they're trying to assess with each vendor whether it's a fit or not. And there's so much human error in that of like, they're persuaded by a good ball game tickets, or like a steak dinner, or likability of the human. And also they can't just, I think AI can conceptualize the broader needs of a corporation as a buyer. And on the other side, the seller oftentimes is just jamming features down. And could you conceptualize a time where an AI agent seller is selling to an AI agent buyer in like 10 years, a long time?
Speaker 2Yeah, I think so. The end state, like you were giving the example of like all this like, you invite them to the ball game. Yeah. Just like the sales rep. Sure. I think there's a lot of kind of novelty. There's like, there's the novelty. There's the relationship piece. I think these are important. Yeah. But I think- That never go away. Yeah. I think that the most important thing that never goes away is delivering value. Sure. Right? Like, I think, you know, when you're solving a problem for a business, generally the business's best interest is to pick the one that does, you know, delivers the most value upfront. Right? And like presents, deeply understands their problem. Right? Presents like custom solutions. And I think the end state of sales ends up being a lot more consultative than today. Where instead of right now, all the, all the human effort focused on, okay, I need to go write all these emails. Yes. And I need to go make all these calls. You can actually instead be a lot more strategic in deeply understanding your customer's problems and delivering more creative solutions.
Speaker 1Okay. All right. Let's talk about the team a bit more. What I'm picturing is you're, you're going along your co-founders, a lot of your builders, you're hiring, hiring, you raise some money. There's more builders, a lot of R and D. When you bring in your first, when did you bring in your first non R and D person? Like what triggered that?
Speaker 2Yeah. Um, so our first non R and D person, his name's Terrence. He's awesome. Um, uh, he joined as our founding CSM.
Speaker 3Nice. Uh, CSM first.
Speaker 2Yeah. Why? Yeah. Um, my co-founder Rohan was doing sales, and we wanted to make customer success. Okay. So it was just a gap. Um, yeah, yeah. And we wanted to make customers successful and want to invest in it. Why not take it on yourself?
Speaker 1Oh, I was, I was doing it and we shared the responsibility. Okay. So it was like that.
Speaker 2You ran out of human bandwidth at that point. And that was the first trigger. So it's actually, um, there's, there's a little bit more depth. So in our sales process, um, we run a trial in the majority of sales processes. Uh, and at the time, uh, uh, CSM, uh, was helping with that too. Um, we did a separate, um, 70% of like trials to pay customers. And it's this white glove sales process. Um, but that was also part of it. So he was also involved in some free sales.
Speaker 1Okay. What made you go with him? What were you looking for?
Speaker 2Um, yeah. So he actually had tried selling me, uh, a product. Uh, Oh, this,
Speaker 3you weren't even interviewing him. He, he was out there trying to sell you something. And that's how you met him. Uh, we first
Speaker 2met when he was trying to sell me something. You don't want to say what it was? Uh, yeah. Amplitude. Okay. Cool. Yeah. Good product. Yeah. Yeah. Good products. Uh, you know, wasn't a fit for us at the time. Uh, but he did great. Like he sent me, sent me personalized videos. He like was understanding notes. He understood like other companies that were like related that,
Speaker 1you know, um, so yeah, he ran like,
Speaker 2he understood your context at a deep level and was tailoring the entire sales experience to that. Yeah. And when we, uh, started thinking about a CSM, uh, we had reconnected and, uh, he actually, his, he, he wanted to, uh, and, uh, yeah, we, we hit it off. Like we were actually all still working out of our apartment in Nob Hill, uh, in, in SF.
Speaker 1Uh, he interviewed at our apartment. Uh, we liked him and yeah, started working together. Oh man. There's so much to unpack with this one. Let's take the quick ones first. I do see a trend of especially go-to-market products. Some of the most successful early employees are actually growing. Are actually customers of theirs, dangerous territory to hire salespeople from your customer. But if you can pull it off, it's working out and it makes sense. They're bought into your product and they understand it as a user. The other quick one is he takes a seller and turns him into his first CSM. And they're like, Oh man, this is not working. This is not working. This is not working. This is not working. And so, uh, not on the contract signature, not on the money being wired, but on a acute focus on each customer's desired outcome with their product in their Slack channel and doing everything possible to make that happen. What a beautiful example of the first principles methodology in the pursuit of product market fit in the obsession with customer growth. Let's get back to the end. Well, how would that interview go?
Speaker 2Um, honestly, it was a while ago. I did. He did great. Yeah. He basically owns, uh, every customer relationship. Um, like we just call everybody every week. Um, channel with every customer and you need to understand how how they're doing like what their goals are how they're doing towards those goals how we can help you're basically working for them right like we are helping our our goal as a product is helping our customers drive sales productivity so we need to understand what those goals are like their sales productivity goals we need to understand all the different mechanisms that we can deliver product value to help them achieve those goals so for calling for example it's do you know are all the reps doing well on the call so we need to coach them you know are we do we have all the data corrects right are we calling the right numbers you know are the the titles right do we have a good call scripts like there's all the kind of the stuff around it so it actually requires being like a great product expert and delivering value to customers that way when do you bring on
Speaker 1your first salesperson
Speaker 2why yeah we brought on two sales reps at the same time same time yeah a lot of advice that we've gotten good just in case I like the advice yeah it's good yeah and but but
Speaker 3what was it why well when you're
Speaker 2getting to the point where you're ready to like start scaling it up and moving past founders founder led sales I think there's there is high variance in like an interview process it's like you know imperfect signal and you know hiring one sales rep there's just kind of a lot weighing on that yeah right if they don't work out you know it takes like you know three to six months to figure that out then another couple months to hire someone and then you just like set your back yourself back like right here yeah
Speaker 1bang hire two salespeople at once I love it we learn in the science of scaling as we enter the growth phase so many people lump sum hire all the sellers up front but instead we need to establish a pace but don't hire cohorts of one always hire cohorts of at least two salespeople at once it mitigates risk if we hire one seller how do we know if it doesn't work is it the hire or is the system but if we hire two at once we mitigate that risk substantially great advice by Dan let's get back to the episode
Speaker 2so hiring two just helps the
Speaker 1risk it what else went into the transition from founder sells to a
Speaker 2professional sales org yeah so Rohan my co-founder who leads product now was our first kind of seller yep and it transitioned from him you know just leading all the sales so you know hiring and evaluating and starting to manage and build the sales team and then you know we as we started scaling we had to bring we brought in sales leaders our CRO today actually was our second customer hmm and where's modern health nice yeah so yeah I think it transitions from you know doing all the sales yourself to building the systems and incentives and understanding the great like the right talent which is probably the most important and kind of putting that structure in place now
Speaker 1one of the general narratives I think out here in San Francisco in Silicon Valley is AI distribution is totally different and I think they're largely kind of pointing at like open AI and in Claude and other tools like that some of that is rooted in PLG and you know if we decide not to do that yeah talk to us about that you know when when
Speaker 2Michael and Amman were starting cursor um uh I you know remember they were they actually like stayed with us in our apartments and they were like oh should we go build this um uh VS code fork or like this uh figment of code and I think uh you know we were all like oh we'll build a figment of code because like that's really useful for us and you know but so cursor um uh is a great example where engineers have budget uh and they have access you know they can connect all their tools and they're always trying new things and the engineering manager doesn't mind if like some engineers use a different tool right um whereas sales reps don't have permission to connect Salesforce and they don't have discretionary budget and their sales manager probably gets annoyed if they're using a bunch of different tools so that PLG motion didn't make as much sense for us this is
Speaker 1classic inappropriate cut and paste you go to the boardroom I was on the board of cursor and this is the type of salesperson they hire this is the pricey model they use this is the distribution strategy they use just copy it that's the beginning of the end we have to optimize our go-to-market system for our context and that's what Dan is doing here so check this out in this image of the go-to-market system as a reminder it starts with our ICP our ideal customer profile and we build a buyer journey to support the buyer through their decision process there's two inputs the demand gen strategy and the go-to-market hires and it runs every day and then when we pay and coach and compensate our sales people and it spits out in order activities like demos and contracts that lead to a forecast that lead to predictable Revenue and that system needs to be optimized for our context who are we selling to what is our product and what is unique about our business cursor sells to Engineers as Dan points out they can set it up and start use now without any help not the same truth for sales people and sales words as such Dan needs to use a sales-led growth approach great Council great finding by Dan let's get back to the episode right from the beginning yeah you knew that okay what is the coolest like AI native internal workflow that you're proud of that's been built on your go-to-market team and also outside of
Speaker 2go-to-market yeah uh so we use nooks a lot yeah I bet um and our our whole sales team is very efficient at generating pipeline nice um I think uh so when we switch from uh we we used to use Outreach which is like a kind of just like a sequencing like Outreach campaign tool and uh when we switch from using Outreach to to using nooks for um you know our sales team generating pipeline uh we actually doubled our our pipeline created over emails what
Speaker 1do you think was the one like I'm sure many things contributed to how would you summarize
Speaker 2that reason yeah I think um writing good AI generated emails is very hard yeah um and we invested a lot in like making a great like kind of product experience um I think you know there's a there's like the taste element of like writing with the right style there's like the strategy piece of like what content who should you be reaching out to uh but when I ask our reps about it um they say yeah what used to take me like four you know four or five hours to go write you know like 30 personalized emails I could bang out you know in 30 minutes while I'm watching TV amazing uh and I'm getting responses saying this is the best email I've ever received
Speaker 1um very cool so what's the your favorite like outside of go-to-market whether it's in finance or you probably have a bunch of engineering or product that you love what's your favorite one that you've enabled
Speaker 2internally we actually my co-founder CTO Nikhil um just built a recruiting version of nooks um to you know you can say find me all uh the engineers who work at this set of companies who went to these high schools uh and with these you know ran the hackathon at their current uh you
Speaker 3know for prospecting yeah for prospecting exactly
Speaker 2and actually generating uh tailored emails um even create you can like send them like a PDF that's like generated automatically uh and put this all into like a sequence very cool yeah so that's actually that's probably actually now my favorite
Speaker 1case yeah yeah and talk about the higher end of the sales people today we talked about the engineers at today scale study stay how does it
Speaker 2work for sales yeah uh so I would say it's not yet the majority but um it's getting close uh a large portion of the sales team is former next customers um we uh yeah we have a lot of you know just customer love and people that use notes and get really excited to sell it um because it's very it's really important when we're selling a sales teams that we have one of the best sales teams in like across the last like five quarters I think our average quota attainment was around like over 130 percent beautiful across the team um
Speaker 1what percent hit on a quarterly
Speaker 2basis uh over 90. yeah beautiful um so yeah I think uh we've been fortunate to have a lot of just like customers joining we actually have a real a great motion of promoting SDRs also to AEs uh and uh almost all of like the majority uh vast majority of our SMB and mid-market team are kind of promoted SDRs and I think they're you know they're all working their way up to Enterprise too um we we had our first um uh promotion from SDR to AE to sales manager recently nice so really excited about that very cool yeah
Speaker 1um that I love that I've never heard that about like a lot of your sellers coming from your customers which is just brilliant for many reasons and contextually unique that you are building a sales you're selling a sales product yeah I guess my only devil's advocate was like do the customers ever get upset yeah
Speaker 2like and we we don't actively recruit yeah sure
Speaker 1they come to you and like that's it would be against the law for you not to consider them yeah exactly
Speaker 2exactly uh and we are we like you know try very hard not to yeah yeah for sure that makes
Speaker 1sense um can you talk about like how the comp plan works and the quotas and
Speaker 2stuff yeah yeah um uh let's see we have like I'd say for AEs it's probably like a fairly standard comp plan I would think maybe more about like goal setting for the company over tripling year over year yeah crazy uh and in setting goals it's yeah it's this interesting exercise that I'm still thinking through Because on one hand, you know, when we're growing so quickly and there's also like a lot of variables with high upside, like we launch new products or like we're seeing extra growth in enterprise. There is it's like a little bit harder to predict. And there's this question, do we set goals that, you know, we're likely to hit without having to, you know, execute on these upside bets? Or do we set, you know, really aggressive goals that push the team? Yeah, that's hard. And yeah, I think the balance that we've struck is from like the sales goal standpoint, we've been generally picking goals that we're likely to hit. But from a company goal standpoint, actually having like higher goals and then basically like pushing to overachieve.
Speaker 1So you almost model at something that you feel is fair and very achievable. But you found a way to get them to thrive. You want to aspire. You want to aspire to an aspirational goal. And that becomes the culture.
Speaker 2Because you don't want like when we're growing really quickly. You don't want us like tripling year over year and the sales team like not hitting their goals, right? Because that's just like a weird place to be in. So, yeah, like for in setting like comp goals, we generally tend to like underestimate a little bit, especially again, especially when there's like upside that we think is likely. But it's hard to know exactly. But then for company goals, it's important that we're aggressive.
Speaker 1That's great. I'll shift another gear to something very common in the narrative today. And that is the defensiveness against clot. Yeah. Everyone's thinking about that in the application layer. How have you guys worked through that?
Speaker 2Yeah. If you were to list all the jobs in the U.S. that have over a million people doing them, I think it's something like there are about six million drivers. There's about five million in sales. There's three million in customer support. One and a half million software engineers. This is from top to bottom. Yeah. And a million lawyers. And like I might have missed like one job or two. Yeah. Yeah. So, yeah, those are some of the jobs. And I think that of these, sales is actually one of the furthest from model capability. So, you know, why are models really good at coding? It's because they can see all the code. It's like fully observable. There's a tight feedback loop, meaning, you know, there's kind of a right answer. Right. When it outputs code, you can compile and test and verify it. And it's a closed environment. Right. It's like fully reproducible. So as a result, you can like, you know, build agents that are really good at coding or it's like similar even in like, say, like a customer support or legal where you have a knowledge base or you have like a corpus of documents and you can verify against like historical tickets and cases. And there's kind of a right answer. Sales, you know, what is sales? Sales is the art of influencing a buying decision when you're selling to companies across like a bunch of people and you're trying to change how people think. But you can't see how they think. It's not observable. Right. You don't see how they influence each other, their problems or priorities. There's not a great feedback loop because I can have a sales conversation. And because I can't see how you think, I don't know how that, you know, how that sales conversation went until three months later if they signed the contract or not. And it's also like this pretty complex environment where it's adversarial. You negotiate with them. It's competitive. You have competitors coming in from different angles. It's multiplayer. Right. You're trying to deal with like, you know, a bunch of people. You're trying to deal with a bunch of people that influence each other in ways that are unpredictable. And it's like very under-contrained. So that's why it requires like this human taste and judgment piece.
Speaker 1I love that. So maybe can you abstract that even more for our founders that are listening, that are paranoid whether they're at risk with Claude? What are some of the things you look for that, ooh, you would be at risk versus what are the things that you would not in a very abstract way? And it's like, because I do, you know, agree or disagree with me, but there does seem like a lot. There's a lot of bullishness in the Valley specifically that many folks will just have Claude in their application layer and nothing else will be there.
Speaker 2Yeah. Yeah. I think like Claude is great for like so many different use cases. And I think though, like, you know, for sales, there's a ton of use cases around, okay, connect to the CRM, like analyze all your accounts, like come up with reports. You can have it write emails, build these custom workflows. I think one of like one type of moat is just the level of traffic. Yeah. The level of depth that you go in. Like there's so much that you have to do to like automate a sales, you know, the sales role. And you have to build really complex eval data sets as different from company to company. You have to build a system for, you know, agents to work with the humans to, you know, the humans will need to make the call. Right. So like you need this specialized interface and, you know, and UI, you need to build the feedback loop because the sales process changes over time. So you actually need to learn, like, you know, how prospects are reacting. You ship new products. Like how we should change the process. So I think, you know, our approach is like capturing that sales intelligence that's like specific for each company. That's not something that like, you know, a cloud is right now built to do, you know, a cloud is more good at like general reasoning. And as a result, really good at this like breadth of use cases, but not going like as specifically deeper, you know, in our case for sales.
Speaker 1What an amazing story, man. I'm going to end it with one for our founders. And I'm going to ask it in either way, either what would your one piece of advice be for that 22 year old at Stanford, like starting that project and turning a company? Or what would that advice be if you took a time machine back to Dan Lee in 2000? What would you say that you had to kind of figure out as a founder and CEO?
Speaker 2Yeah. If I were to take a time machine back, I think be paranoid about how much value you're delivering to customers. You don't want to be a nice to have. You want to be a need to have. You want to be a really rigorous about picking, like what's the mechanism to understand if you're a nice to have or a need to have?
Speaker 1Yeah, I love that. What is it? I mean, I know you talked about it and you said it's like, well, it's like a little better. It just seems like we need, humans will tell you what you want to hear. There's a lot of false positive risk in that question. Yeah. How do you ensure that you can get through it?
Speaker 2There's a great book called The Mom Test that I've already read. Yeah, love it. Yes. Yeah. How you define PMF, you know, it's not. It's amazing. Yeah.
Speaker 1Okay. Well, Dan, you deserve it. You know, this was not luck. You are, the ecosystem is very fortunate to have you both in tech and sales. I really appreciate you sitting down and having coffee and dropping knowledge.
Speaker 2Yeah. Thank you for having me.
Speaker 1Take care. All right. Dude, kill it, man. Well done, dude. Yeah. Thank you.
PodcastTranscript AI