My guest on this episode is Michael Coscetta. Michael has held several high-level sales roles at companies like Square, Compass, his own company, and his current role as CRO of Paxos, and through it all has become an expert in designing and managing sales teams.
This was a fantastic conversation about all things sales and building sales teams and is one I will be re-listening to several times over the coming years. While a large portion of Michael’s time has been spent in very large sales organizations, the principles he talks about are still widely applicable in companies of any size, and all regular listeners to this podcast are in for a treat.
Michael and I talk about writing high-value sales contracts, the growing importance of high-performing sales operations, how sales have become data-driven and more quantitative, how to recruit for sales, and the leadership of sales.
One final note before the episode, I want to meet more sales professionals, especially in data and data software. If you, or someone you know, have expertise in data enterprise sales I would love the chance to connect. You can find me on my website alexbridgeman.com, LinkedIn, and Twitter, or send me an email directly at alex.e.[email protected]. Thank you, I look forward to chatting soon!
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(4:32) – Michael’s background and career
(7:03) – Are there any common principles you’ve picked up over the course of these vastly different experiences?
(9:28) – What have learned about building valuable sales contracts?
(12:42) – What processes or strategies have you developed to find the right pricing matrix arrangement?
(15:49) – Are there any questions you ask customers to find optimum pricing?
(18:55) – Have you seen an evolution in how sales teams are viewed in companies?
(22:04) – Is there any data set that has the most impact on a sales team?
(24:37) – What are the differences between sales orgs of less than 50 people and larger ones?
(27:33) – How do you go about setting sales goals?
(30:38) – Do you have a sense for trigger points for when you separate different parts of the sales process into their own individual teams
(32:42) – How do you view renewals or upsells for existing customers vs. new ones?
(33:57) – What personalities or characteristics work best for filling out different sales roles?
(40:31) – Are there any helpful questions or interview styles to determine whether a candidate is a good fit?
(42:57) – What are some best practices for making sure sales and products are communicating effectively?
(45:57) – Are there any communications methods that work well with customers?
(48:51) – How does the product team decide what customer feedback is valid and what is noise?
(53:09) – In this environment, how do you continue to build and improve your sales team?
(55:54) – Can you expand on the concept of the sales org being the brains of a revenue organization?
(58:00) – How can a CEO get more involved with their sales team in a non-disruptive way?
(1:00:16) – What strongly held belief have you changed your mind on?
(1:01:11) – What’s the best business you’ve ever seen?
(1:04:06) – What other companies do you study and admire for their sales org?
Alex Bridgeman: I think to start off the episode, it’d be great to hear a little bit about your background. You’ve had a bunch of different really interesting roles at Square and Compass and now Paxos. There’s tons to dive into in each of those. But can you give us kind of a couple minute overview of your career to this point?
Michael Coscetta: Yeah, I mean, I’ll run it backwards. So currently Chief Revenue Officer of Paxos, a blockchain infrastructure company, really just doing our best to connect the traditional financial world with the future world of blockchain through a set of APIs and helping customers tokenize real world assets. And as you can imagine, the blockchain world is quite rife these days with its own challenges and uncertainties and market dynamics and macro factors and regulatory factors. So, probably the most complex environment I’ve worked in and working with incredibly large, complicated customers as well. Prior, I was the Chief Commercial Officer and Chief Strategy Officer of Compass, the real estate tech company, responsible for agent revenue as well as growing a lot of our secondary products, so our home services product, a lending product, and eventually kind of the budding sets of our title mortgage and escrow divisions from scratch. So, acted more like a GM there than a pure revenue person. But it was an interesting experience, for sure, to understand kind of a very diverse world of real estate agents and regulated market across different states, and definitely a different shift from where I was before that which was Square, the payments technology company. That’s obviously grown quite a bit over the years from a little point of sale and a little credit card reader you plug into your phone to now a very broad suite of point of sale payments and peer to peer and lending products and many other products that they’ve bolted on across the years. And I’ve ran global sales there, so sales partnerships for business development, and expanded that company from a barely public $3 billion business, to when I left, we were almost 55 billion. I think they peaked over 150 billion at some point the last couple of years. Before that, I was Vice President of Sales and Marketing for a small software company in New York City called StructuredWeb, selling marketing automation software. And prior to that, ran my own business for over nine years, really teaching people how to sell. And I’ve had my life, really my professional life built in sales and learned through sales and have grown to diversify it since. But that’s the trajectory to get me where I am now.
Alex Bridgeman: And then there’s tons of different roles in industries you’ve worked in through all those different experiences. Are there any common threads that you’ve learned or principles you’ve adopted over time as a result of each of those experiences?
Michael Coscetta: Yeah, I mean, they’ve been at so many different stages that I think the industry actually becomes less relevant. It’s almost where’s the business? What’s it trying to do? And how does it try to get its customers? How does it generate revenue? I think the commonalities are, number one, solve problems at scale, try not to have to solve the same problem more than once, and stress test every idea of like when does this break and how does it break and start to think ahead so that your business is very agile and flexible versus being brittle. Because as it grows, you don’t want growth to be the enemy of your success, and you certainly don’t want to be afraid of it. I think the second is really pricing, funny enough, which is like don’t be afraid to charge a lot of money. I remember the first $100,000 contract I signed. I was like this is a lot of money, like who’s thinking about paying 100 grand? It’s not their money, it’s their company’s money. And all of a sudden, you charge more, and people pay more. And there’s this conflation of price and quality that people said something I’ve kind of stuck with me. I think the third, which is probably the most universal, which is finding the right leaders around you, well, first of all, work for the right leader, make sure you really respect the people above you and can learn from those people. Find a peer set within the company that you really can work with and collaborate well with. But for your own teams, hiring people who complement you and being very aware of your weaknesses and your strengths, but leverage people around you for your weaknesses and double down on your own strengths and really manage and work through people. Everything happens and starts and ends with human capital inside of a business. And I don’t think that ever changes. And I’d say probably the last point is find industries you really enjoy and spaces that you want to be a nerd in. You don’t want to be in an industry where you don’t want to learn extra. Like you want to kind of keep yourself up late at night and get excited to hear news in the morning and track innovation. And if you don’t have that, that’s a challenging place to really get the best version of yourself.
Alex Bridgeman: So, I want to dive into actually pricing and sales contracts a little bit. That’s an idea that’s been top of mind for me recently. What are some principles you’ve learned about building valuable sales contracts? There’s an episode we did a little while ago with these two entrepreneurs from Austin who bought a landscaping business, and they went to a competitor, or not a competitor, an acquirer, and just asked like what in our sales contracts would make our company more valuable, and then just took that playbook. And there’s things like price escalators that they did and a whole bunch of other things. But when you go to build a high value sales contract, what types of structuring and terms do you use in that contract to make it more valuable for you and potentially for the customer too?
Michael Coscetta: I think it depends on what stage you’re at and what you’re trying to show. So for example, if you’re an early stage business, and you’re raising money, and you’re in a very challenging VC environment like you are now, front loading cash is going to be much more important. And you may be willing to give a discount to get cash in the door so that you can push the window out of time for when you may have to raise money. That’s a very selfish thing of the business, but it’s probably important for sustainability and longevity of that business. I would say, second, if you’re trying to show lifetime value and you’re trying to show that you have these long predictable revenue cycles and revenue streams coming in, then elongating – how do I get this customer to commit to 2, 3, 4, 5 years and make it worthwhile for the person today to be able to make that decision. And some companies will not allow someone to sign a two plus year or three plus year deal. But that’s a big one. The third is on a technical level, make sure that all pricing is mutually beneficial in the sense that you really want to benefit from their growing, but they should also be very excited to grow. So make sure that you understand the unit economics on their side of how you’re pricing. Because if you price something to a place where they’re afraid of growth on their side, well, they’re going to be looking to replace you at every step, or they’re going to need to replace you at every step because at some point, they just may not be able to pay you. There’s a podcast that I heard a long time ago about a very large customer of Stripe. And the person’s comment was, Stripe built a product I needed, they built a product I couldn’t get off of, but they built a product that I never wanted to get off. And I was like, that’s such an interesting concept of I can’t do without this product embedded in my ecosystem, but they’ve also built it in a way where I can continue to grow, and the unit economics don’t get worse over time. So it really depends what you’re trying to accomplish at that stage of your business. But I would say all pricing should look mutually beneficial. And neither side should be afraid of the other side growing very aggressively because that should be a win-win. And I don’t think enough people approach contracts that way.
Alex Bridgeman: Yeah, and you kind of touched on it a little bit, but building a pricing matrix for different sized companies with different enterprise products sounds like more of an art than a science. And there’s some founders I’ve gotten to know who have built these matrixes for enterprise software, and they’ve refined it for years, and they still don’t feel like they’ve really nailed it. Are there any good processes or strategies you’ve developed for kind of finding that right pricing matrix arrangement?
Michael Coscetta: I think you have to be willing to ask the questions on their side of how they’re- how this price fits into their margins. And some will be willing to share, some will not. But that insight and just knowing where this cost is being applied is really critical to being able to understand how they’re going to view this in the long term. And what are they going to be willing to do in the short term to even get this product and get this contract or whatever it is off the ground, especially when you’re in a world of adoption or consumption economics where there may be some different shaped price curve that happens based on how much they grow and how much they use. Those are becoming much more common as well. I found customers want some level of predictability. They want to have certainty around what they know they’re going to pay for a certain time. But then they also want to be able to say and how to model the upside and downside around that. So walking them through some of these different kinds of thought patterns is really critical and seeing how they react and getting their reaction on their side of what would happen if and almost building these scenarios in place for yourself. But really, you’re walking them through what are they going to say and what are they going to do when they hit these scenarios, so that they’re not shocked or they’re not kind of hitting a wall when that does happen. Another aspect is to ask like how long are you able to sign a deal for and getting kind of that maximum threshold or finding out what is their upper bound for dollars that they’re able to get sign off for. Because sometimes you want quick transactions, sometimes you want it to be on the CFO’s desk because you need that level of visibility and you want it to be that sticky. So you want to handle those objections as early as possible so that the CFO doesn’t come in eight months later and just take a hatchet to the agreement and say, well, it’s nothing, it’s either this or nothing. Those types of catastrophic scenarios you want to be able to avoid at all costs, not just because they look bad, but again, they don’t put customer vendor relationships on a partnership plane, which is where they should be. And if you’re constantly being looked at as just a supplier, well, eventually, with all suppliers, you’re looking to squeeze them. And that’s not, again, that’s not a positive scenario to be in on either side. So, trying to get ahead of those conversations and those questions. And last is just know when their budget cycles are or when their purchasing cycles are because that can really dictate when they have guaranteed money that has to be spent, and if they don’t spend it, they might not ever get it again, or they might not get the budget next year. So if you don’t get it in then, you might get nothing from them. And when you’re in a macro environment like we’re in now where people are really starting to shore up their financial defenses and firm up their balance sheets, if that money is available, you’re going to want to do something with it. And it’s a lot easier to convince a CFO and an accounting team to extend a contract versus to sign something brand new in an uncertain environment. So getting ahead of those aspects I think is really critical to anything on the revenue management side of sales or partnerships.
Alex Bridgeman: You talked about finding a price that was kind of a good fit both for your business but also for them. I was listening to this episode with Superhuman founder Rahul Vohra on Acquired, and he was talking about a couple different questions that he asked, or he asked customers over a long period of time to kind of refine where their pricing was going to be. And it’s not- Superhuman isn’t an enterprise software product, necessarily. But I think the principles are pretty interesting to think about. Are there any questions you go into a conversation with a customer with to find out where the optimum pricing is where you’re not like charging way too much, but you’re also making sure you have value on your side?
Michael Coscetta: Yeah, I think you have to know where the market is. You also may be in a position where there is no market, and people are pricing kind of in a very nascent, very nebulous space. I think a lot of AI is in that world right now, especially more on the generative side. There’s a lot of stuff in our space of blockchain that’s brand new, so there’s no playbook, there’s no historical. So you have to then give some level of perspective to the customer of like, hey, we can’t go below this because of whatever, or here’s where we’re angling to be because on our side, we need that to be able to continue to invest in this product. And again, if it’s a partnership, there should be a very clear acceptance that they want us to continue to invest because they’re going to benefit from that. But I would ask them how their company looks at pricing. Is it based on total dollar amount? Is it based on term? Is it based on monthly cost? How do they feel about consumption-based pricing and the level of unpredictability to that where they may actually get a better deal, but the revenues and the costs will be less predictable? Will they be marking the product up internally or sending it out or selling it into a different set of customers? And therefore, what type of margin do they need to maintain in that if it’s an infrastructure product, like our current one? One thing that we did quite often at Square was just to try to ask the very simple question, and this was mostly to SMBs and mid market, which is like what would enable you or what would prompt you to make a change? Because change costs money, it costs time. So, is it savings, or is it revenue opportunity? So that’s another thing to know – is this product being viewed as something that makes their business more efficient or helps them cut costs? Or is this a revenue driver and a revenue opportunity? And I found that when a customer’s in the mindset of revenue growth, it’s much more likely to get them to be flexible on how they think about pricing, versus when they’re in a cost cutting or optimization mode where they may be locked in to hitting a specific metric. And if you don’t know those things, you’re just shooting blind, and you don’t want to shoot blind in pricing because eventually you may hit the wrong target, or you may sell against yourself or negotiate against yourself, or you may scare the crap out of a customer, and they’re like, well, we could never partner with this company. This will never work. And they don’t realize it, but they’ve subconsciously tuned you out at that point already.
Alex Bridgeman: Yeah, that makes sense. Taking a step back, one thing you’ve talked about a lot is that a sales operations team has grown in importance over time. Have you seen kind of an evolution of how sales teams are viewed as companies and perhaps how that team is now a more important piece of a company now? Is that kind of a trend you’ve observed?
Michael Coscetta: Yeah, I think the big catalyst there is data and access to data. And it goes back 25 years to the advent of Salesforce and really even the advent of the first Siebel CRM and even what airlines were doing in the 60s and 70s. The growth of data has gone from just what’s embedded in the backend of a mainframe to now it’s accessible on your laptop or on Slack or other areas that are just incredibly accessible and easy to digest. So, what are you doing with those data? What are you doing to make your sales process more optimized? What are you doing to better target? How are you using marketing analytics and marketing data to better target spend? So that you’re not just throwing billboards up and Superbowl ads, as many companies have done for decades. That’s not a very precision driven approach. And I think sales used to be a world that was very persona driven. It was about charisma and convincing and being very persuasive and the wine and dine, six Martini dinner to get someone to sign on the dotted line. I mean, it’s not 1970 anymore. Sales is much more about information. It’s about problem solving. And it’s about helping customers see that the solution you’re offering does what they want to do. Again, does it cut my costs? Does it drive revenue? Does it open up a new market? Does it solve a regulatory problem? What does it do? And there’s so much information available publicly about every company and every product that they don’t need the salesperson to go educate them; they could do that on a website in 10 seconds. So what does a salesperson do? It’s about, again, showing optimization. It’s about showing revenue opportunity. So you need data, you need examples, you need case studies, you need stories that are backed with real numbers. And what does a sales operation’s function do? It consolidates all that information into a central neurological system that all teams can operate from. You can build automation from that. You can, again, score leads through that. You can trigger demand gen campaigns based on signals in the market. You can signal to a salesperson, hey, this person is engaging with this content that we put out there, you should reach out to this person, they’re a warm contact at this point. So it becomes the nervous system through which all types of insights and information get processed to then again hopefully make your entire go to market process more effective. And that’s the goal across the board, get more revenue for less marketing spend and sales spend, and get more productivity from every headcount you put into any one of these roles. And that’s what a sales ops team I think does very well. And with the data available everywhere now, that’s more possible than ever before.
Alex Bridgeman: Is there any particular data set you can think of that has had the most impact on a sales team and that whole evolution process so far?
Michael Coscetta: I think there are probably two. It depends on what type of business you are in, like what type of customer acquisition channels are yours. But if you go to a sales driven model where there’s, again, demand gen and leads and human beings talking to those leads, if you look at that model, I think the biggest gain in efficiency and optimization is around lead scoring and what’s called lead readiness. And this is where you get to the nomenclature of marketing qualified lead and sales accepted lead and sales qualified lead, where you’re able to measure each of these steps, and you’re able to determine, well, where did this lead come from and how did it get here, and make sure that salespeople are speaking to the right customers at the right time. That’s a very critical part of making a sales team more effective. Otherwise, you’re just going to spend a lot of time and money on people who are not really driving a return. If you look at kind of a more modern channel, which is a product acquisition channel or self-onboarded channel, which is a lot of self-serve and kind of consumer products that are consumer acquired through some form of technology or portal or sign up or app download, that’s much more about analytics. And you look at like advertising analytics and where are people clicking, where are they dropping out in the onboarding flow? How do we optimize that? Where are they coming from? Okay, well, that channel’s giving us a lot of interest, but not a lot of conversion. This channel’s giving us a lot of conversion, but not a lot of interest. So how do we map those two and kind of get insights from each? And all of a sudden, you build a very optimized funnel. You can have a lot more data in a consumer acquisition strategy that way than you would in a sales driven strategy because the numbers tend to be smaller, and the sales cycles tend to be longer. So it’s a lot around lead scoring, lead analytics, but then the very granular level of data that you get on marketing campaigns and demand gen on the consumer side are also incredibly helpful to, again, make sure that by the time someone’s either in the onboarding flow or speaking to a salesperson that they’re highly likely to convert. But again, it’s how do you get them there in an effective, kind of really prescribable way, so that you can then rinse and repeat that and then test new channels and new acquisition strategies as well.
Alex Bridgeman: What do you think are some of the biggest differences between a large sales org and something- a sales org that’s maybe less than 50 people? It sounds like data could be part of it, the use of data. But are there other aspects within an organization or structure or process that you see most often missed at 50 and below that they could be doing or should be doing?
Michael Coscetta: Could or should is tough, but what I would say is that you tend to have sales organizations grow horizontally, and then they grow vertically. And by horizontally, what I mean is they tend to do more aspects of the sales cycle when they’re smaller. They not only, quote unquote, close the deal, they’re very often helping with implementation and onboarding, and they may even be the account managers throughout the whole lifecycle until you build a separate function over there. So I think horizontal in terms of a lifetime. And as a team grows, you then can start to specialize more and more. And each team tends to do better because they own a very specific set of data points, and they own a very specific part of the lifecycle of that customer. The other is verticalization, where there may be this giant world that you could go tackle, but they’re covering every industry, they’re covering every customer type, every customer size. So as a team grows, you also want to specialize there, someone focused on healthcare, someone focused on, I don’t know, aviation or transportation, or it may be geographically based specialization. The more salespeople specialize, the more effective they tend to be. The challenge is you need to have enough volume there to sustain that, you need to have enough data there to know that you can actually win that vertical, that you have some advantage in that vertical. Otherwise, you’re just ending up creating complexity where there probably isn’t any. The two things I’ve seen sales teams mess up as they go through these transitions, they don’t adapt their variable pay fast enough. They tend to be either too aggressive or too conservative on the commission side or like the upside component of total compensation. And they don’t adjust those over time. The second is they don’t have a very clear quota strategy. There are some companies that build quota for 100% attainment. We want 100% of people to attain at 100% because that’s like a perfect world. There are others that actually want less than 100% to attain, but they want the ones who attain to significantly over attain. So you end up having a skewed distribution, but you end up having a smaller set of very, very high performers and then kind of a wider range of mid and lower performers. And there are very different reasons to go in both those directions. Not one is right or wrong. But it’s important to have that strategy and not just to kind of set these things haphazardly. Otherwise, you won’t be hiring the right people, you won’t be setting them up with the right expectations, you won’t be measuring them properly. And it’s often the incentives of that team might not be aligned with the long term incentives of the company.
Alex Bridgeman: Can you dive into that a little bit more? Like how do you go about setting sales goals, and what’s your own philosophy for attainment, as you as you put it?
Michael Coscetta: Again, in a perfect world. So a couple of companies back, it was 100% at 100%, kind of what we used to call the perfect crosshair. We had a big enough team and enough data to really be able to do that. Now, what that means at the end of the day is that if someone’s not attaining, that there’s like- they’re underperforming, versus having this distribution where not everyone attains, but the ones who do, over attain. Why that matters is because you end up having a much more call it like democratic with a low d type approach to how you hire and how you train, versus having like your key set of mercenaries that you really put on your strategic accounts that are meant to be the highest beta individuals you have, meaning they’re going to go after the highest upside, even if it means sometimes they miss their quota. You may do that if you have a very, very specific sale or very specific product with a smaller subset of companies you’re targeting. That’s why you would tend to go in that direction. But when you’re looking at setting quota and setting targets, what’s the point of a sales organization? It’s to generate a specific dollar amount for the company. That dollar amount should be pegged to either an ROI or a payback period that the company itself is setting forth to hit, whether it be, hey, we want all spend to be paid back in 12 to 16 months, or we want to bring on customers with a lifetime value that’s a 3 or 4x ROI on the cost to acquire those customers. So it’s important to get those questions answered first. And that’s usually led by the CFO or the CEO or the board or a combination of them to know what are we trying to target in this business, and then you set your quota from there. If the team is set to deliver X dollars, well, how many people are on the team. You divide it out by how many people carry quota. And then those people also have to carry enough revenue to pay for the supporting teams that are necessary to employ those quota carriers, whether it be sales enablement, sales ops, sales managers, whatever. And you have to really account for all those details. And then you have to set another layer below that, which is what is the marketing support cost to generating this form of revenue, demand gen itself, brand advertising, comms, PR, software, whatever that might be. And then you look at like your straight line cost of acquisition and then your burden cost of acquisition to generate, to figure out what is my cost that I’m trying to multiply to get to that ROI. And that’s an exercise we would go about every year when setting sales plans and eventually proving headcount below that. And of course, each head generates a certain amount of revenue as part of their quota. And making sure that those numbers feel and look attainable based on whatever data you have. If salespeople start a job or start a year and the quotas seem unattainable, they will subconsciously checkout. And then it’s only a matter of time before they truly check out when they realize that a significant part of their income will be unattainable.
Alex Bridgeman: And you also mentioned the horizontal expansion over time. Do you have a sense for trigger points for when you separate off different parts of the sale process with a potential customer into their own individual teams?
Michael Coscetta: The obvious trigger points are when you’re either churning customers because they’re not getting the post sale time and opportunity that they need to maintain them, or you have a very, very deep bucket of leads that are not being spoken to because those salespeople are spending their time on post sale. So, those are the obvious ones. Somewhere in the middle, you’re going to have just this world of lifecycle management and kind of looking at what does the lifetime of a customer look like? When do they need the most time? And when do we get the most return on that time? Because you also don’t want to turn your salespeople into customer support. So, it’s not just when do you need account managements, it is when do they need support? When do they get support? What type of support do they get? And something that we’ve done in the past is actually block customers from even directly connecting or communicating with salespeople if we deem there to be a better place for those types of support or ongoing account management inquiries to go. So, it really depends where you are in your life cycle and what dollar is worth more to you. Is it dollar of net new customer, or is it dollar of extra revenue from an existing customer. And again, that really depends where you are in your business. But those first two triggers are usually the pretty obvious ones to be at least alert of because you know there’s an opportunity cost at that point. Whereas maybe before that, you’re just assuming, when you see leads build up or churn start to spike, unless that churn is caused by another factor you can point to, you probably need to address it with people because to retain revenue is also worth something to you. So putting humans on that to do that maybe a better ROI than ignoring churn.
Alex Bridgeman: Yeah, do you have a different view for incentives for renewals of existing customers or upsells versus new customers? Do you have different structures and incentives for each? Or are they fairly similar?
Michael Coscetta: Typically, they’re very different. It’s usually also a very different person who’s what you’ll hear called hunters and farmers, hunters looking for net new logos, new customers, they want to be chasing, bringing the person in for the first time, cross the finish line with them. That you tend to see a higher incentive split, meaning a higher percentage of their total compensation which is based on performance. On the renewal side, there’s a level of predictability to it. There’s a level of like project management and customer relationship building versus selling. There’re still some sales there. I don’t want to impugn the role in any way. It’s a very critical role to fill. But it does tend to be easier to get an extra dollar from an existing customer versus getting an extra dollar from a brand new customer. So they have to be trained differently, they have to be comped differently, and you also tend to hire very different people in each of those roles.
Alex Bridgeman: Yeah, can we dive into that? We’ve talked about the data side and some of the numbers and process behind this, but it’s obviously a very human focused endeavor. What types of different personalities or sets of characteristics are good fits for various roles within sales? Do you have a couple different buckets of people that you tend to seek out to fill different parts of your sales team?
Michael Coscetta: If you’re in a world where it’s a complex product or it’s a new industry, where I found myself in a couple of those along the way, I think you almost have to hire for curiosity. You have to hire more generalists then people with a specific set of expertise that might not be relevant in this new world or this new paradigm. Sometimes you even find that people with certain experience are bad for a role because they carry all these suppositions and all these past ways of doing things. But meanwhile, the company you’re in is actually trying to disrupt the exact industry that they’re coming from. So that mapping doesn’t always work. Yes, they understand the lingo, they understand the personas and who’s in the industry, but they don’t understand how to actually go now bring a new technology forth to go solve that. So what type of persona is good at solving it? Well, someone who’s going to ask a ton of questions, someone who really wants to learn something new, and someone who can learn very quickly. I love generalists in the sense that they can bounce their brains to different sectors and different customer types and customer sizes in different geographies. And that allows them to be more versatile as a sales organization will start to morph over time. A go-to market team has to be probably the most agile team in the company because they can pivot faster than a product team can and certainly faster than an engineering team can. And that pivot is important because you got to be able to pay attention to the changes in the space. So, salespeople are much more about listening to what’s out there and, again, prescribing a solution that solves a problem. But if you can’t listen to what’s out there, and you can’t put the pieces together to form a picture, then you’re actually not solving anything. You’re just spewing information that someone could read on a website. So, that ability to figure out what’s the shape and size of a key that will turn this lock. So again, people that ask a lot of questions, people have that natural hunger and desire to bring on something net new, people who also want to spend time talking. There are plenty of introverts and extroverts who actually don’t like to talk to other people, and that’s probably not going to be a good fit for sales. And I think you get a pretty good glimpse of that when you speak to someone briefly in an interview, it’s like is this a natural dialogue, or is this forced, is this being coerced in some way because they think they have to do it. And over time, those things tend to tease themselves out. So, a natural social personality doesn’t hurt. And by the way, some of my best salespeople of all time, they’ve been like pure introverts. Being an introvert doesn’t mean you can’t be a good salesperson. It may be the opposite because maybe they’re incredible at listening and incredible at finding those nuanced ways of delivering information that that customer really needs and wants to hear. That’s just as valuable as someone who’s garrulous and affable and loves to get out there and drink beers with a customer. Both sides can be incredibly valuable.
Alex Bridgeman: And how do those characteristics you look for shift when you’re looking for someone in a management role within your sales team? Is there different sets of characteristics and personality that you’re looking for? Like how much overlap is there between that person and talking to customers directly versus that management layer?
Michael Coscetta: There tends to be a Venn diagram. And the two circles you tend to have in really good salespeople as individual contributors is that you have like the master tacticians who build like a very strategic project plan, and they know what they’re going to do when and what they’re going to send when and how they’re going to do it. That level of strategic planning you tend to see much more common in the enterprise world, but you do see it more in the organizational and project management sense in the SMB world, as well. So, it’s one thing to be hyper organized and strategic. It’s another thing to be able to teach someone how to do just that. So the other part of the Venn diagram is someone who’s good at training and someone who’s good at sharing, so giving individual contributors the opportunity to impact others, to run a training, to run a master class, to give a webinar, to do a lunch and learn on a certain topic to see, number one, is this a fit? Does this person actually enjoy this? And number two, how do they convey information that is sitting in their brains and the level of expertise? Can they transfer that? So if you can find someone who has both those worlds overlapping, you’ve got, in my world, you’ve got an amazing manager. Now, the other side of this is actually management, which is you have two extremes in the spectrum. You’ve got your drill sergeant on one side – do this, do that, and it’s my way or the highway. And on the other side, you have a therapist who’s solely there to make people feel better. Most sales managers cannot live in either those buckets. The drill sergeant persona is much more effective for junior roles where there’s a very prescribed process, which also means you have to have a mature, predictable, tested sales process where if you do A, you get B. If you don’t have that, that drill sergeant falls on deaf ears because half the stuff they tell them to do makes no sense. On the other side, the listener and the therapist is actually really important when you’re exploring something new, where there’s a lot of unknown, a lot of uncertainty, a lot of changing dynamics. But again, you can’t live there forever. Because if people feel great and they’re not delivering well, you all get fired. Because rule number one in a sales team is generate revenue. So you have to be somewhere in between, and knowing where on the spectrum you need people depends on the maturity of the organization, the predictability of your revenue channels and your go-to market strategy, the need to be able to grow people in a role. Again, you can grow someone through drill sergeant techniques, but they’re going to generally grow up to be more drill sergeants. So is that what you want and need? Or do you, again, need more of a listener and the people manager to really coerce, not coerce, but to massage the individual to being in the right mindset to go solve the problems that that industry may face. And you tend to see that in a lot of like either highly regulated spaces where there’s a lot of third rails that you can touch and get burned on or in a space that may be coming under a ton of macro pressure. I can imagine the mortgage industry is dealing with that right now, the crypto space is dealing with that to some extent, all the fintechs are dealing with that. So again, where you are really depends. Pick the spots in the matrix, and you’ll find the right sell. And building that matrix for your business I think is actually really important.
Alex Bridgeman: Are there any helpful questions or interview styles that you take on for kind of figuring out which persona this person that you’re interviewing is and then would they be a good fit for your company at your stage?
Michael Coscetta: There are two I think that are pretty basic but for me, at least, have been universal, which is, number one, tell me what your outstanding at. And I don’t mean good, like I can see your strengths, I can see what you’ve done, but like tell me what you’re truly outstanding at. And then the question is, why are you outstanding at it? How did you get there? And what comes out of that is generally desire of where they spend their time. It’s very hard to be outstanding at something accidentally. Unless you’re a prodigy or Einstein or whatever, it’s very hard to be accidentally outstanding. So I want to know where do they spend their time, what motivates them to spend their time there, what are the feedback mechanisms that keep them recharged in that space. And you tend to get that when you focus on just the simplistic of what are you outstanding at? There’s also a converse question, which is, what are you terrible at? And tell me why you’re terrible at it, and tell me why you don’t want to get better at it. That’s okay. There are many things I’m terrible at. And there are many things I’m terrible at that I have no interest in getting better at. But why? Again, and you just keep going through the whys, and you really learn a lot about people. The second is about management style. And there’s no right or wrong style, even in the two extreme worlds we just talked about. But what I want to come out from a management style is that it’s not about the manager, it’s about the people in front of them. What does my salesperson want? What does my team need? How do I help them get better? How do I teach them more? How do I make them more confident? How do I build their confidence in themselves? How do I get them more independent and more autonomous to be able to figure things out on their own? If the manager comes back with spoon feeding and just handing them answers, that’s going to get you very, very small gains and definitely not sustainable gains because those people end up being dependent on that manager. And the one thing you’re constantly trying to do is to develop independent autonomous leaders at every level. And those are just some of the proxies of I think how you get there. Again, there’s no right or wrong answer to the business. But knowing what you want, knowing what your own strengths and weaknesses are and who has to complement you around the org lead you to where the answers are to those questions that you probably want to hear.
Alex Bridgeman: Another concept I know you’ve talked a lot about is the integration with sales and product. And you alluded to a little bit earlier where that your sales team is actively discussing or talking about products with customers and getting constant feedback on a daily basis. What are some best practices you’ve discovered for making sure that sales and product are communicating and working together?
Michael Coscetta: I think if you look at history, especially in tech companies, the sales teams were left on an island. They were personas non grata to a technical team because sales teams have a history and a tendency of my customer needs this, we got to build this, and they’re thinking very narrow. They’re thinking about their own deal or their own customer type or their own quota. They’re not thinking holistically about a platform or about a global solution. And I think that’s morphed for the better over time as tech companies have become more prevalent, but as even sales teams have kind of taken on a very different role in tech companies, which is to be the voice of the market. And Jack Dorsey at Square used to say the sales team is the voice of the future customer. That’s a really important place to be because it means you actually are seeing the future. You might not be right every time, but in the aggregate, you should get some level of truth of where this business is going or at least where the market is going. I think it’s critical now more than ever, as these teams have come closer together, for there to be a constant two-way street of information. From the sales side, here’s what we’re seeing and hearing. From the product side, here’s how we think about doing this at scale, here’s how we think about solving the next set of problems that customers don’t even know they’re going to face. Because that’s what product people tend to be really good at is being able to see where does the shape bend? Where does the curve no longer hold? Where do certain things break? And that two way street is critical. And I think if you have one and not the other, you’re either going to build a product in a silo that actually won’t map to the market, or on the sales side, if you’re too much there, you’re just going to keep building one off point solutions or keep building one off bespoke products that will never scale into platforms. And I think the reason these groups are coming together is the advent of platforms. Platforms are more viable and possible today from a technical perspective than they were 10 and 20 years ago. So you tend to see more things that have to be solved at scale, more markets that you won’t want to solve just for that market, you want to solve for that market plus the next adjacent market, and constantly mapping where these markets start to touch so that product can get an idea of where it can go next. And I think salespeople have to really build the muscle on how to speak to product and engineering and to transfer information in a really objective way. And then product and engineering I think need to be really good at figuring out from a sales team how do we shape and mold all this data and information into a place that gives us true insight about where a market is going.
Alex Bridgeman: Are there any communication methods you found that work really well for facilitating that back and forth? Is that some sort of weekly or monthly meeting or some place where ideas and feedback from customers is shared with a product team? Like, on a technical kind of tactical basis, how do you get that information across to each side?
Michael Coscetta: I think the simplest way from the ground up is all the data should be accessible in a central place at all times at any time for either side to be able to go get. So, it’s all that information sitting in Salesforce. Now it’s going to sit there passively. No one’s going to do anything with it, but at least it’s there, so if people do start to query around, they could find it. The next layer up is kind of at the aggregate level, having some level of readout on a quarterly, monthly, whatever the right cadence is for your company, here’s what we saw last month, here’s what we saw last quarter, here’s what’s important, here’s what we’re asking for, here’s where our gaps are. But that’s a curated view. And I think the curated view does cut corners in some places. It’s the definition of curation. You’re seeing the whole wide buffet, and you’re saying we’re only going to eat this. So there’s some bias to that. But nonetheless, it is valuable. I think the third layer is what’s happened kind of on a more technical, more frequent level. And at Square, we used something called a DRI program. A DRI is a directly responsible individuals, really it was a liaison. And instead of having 300 salespeople sending over feedback and comments and requests to the product team every week, well, each product had a PM on the product side, and then a corresponding sales DRI. And that sales DRI was responsible for collecting all feedback and all examples for that specific product and shuttling them over to the product team once a week or every two weeks. And that sales liaison was actually in the product meetings with the product team every two weeks as well. So not only were they giving information, they were also ingesting product updates. Here’s where the bugs were, here’s what they’re doing next, here’s the new timeline on the roadmap. So, you also don’t have salespeople pinging product for roadmap updates constantly, which as you can imagine, they don’t love those constant requests. But salespeople also don’t love product managers coming in and saying, hey, can you give me an example this and who wants this and where do these data sit? So those DRIs, eventually, we had almost 40 of them for different products or sub products or features, and it kept all the information very organized. And if anyone on the sales team had a question about, I don’t know, product X, you would go to the DRI of product X, and there’d be a wiki setup as well where all that information was kept. So very important to keep the information sitting in a passive sense so that people can query it when necessary, aggregate it on a monthly or quarterly level, but then set up a really consistent tactical level cadence where possible so that there’s always information going back and forth on a pretty frequent basis.
Alex Bridgeman: And as you’re receiving that feedback and sharing it with the product team, as a product team, how do you decide what feedback you should pay attention to versus what’s noise and not useful?
Michael Coscetta: Noise tends to come out in two ways. So number one, there tend to be patterns that don’t fit; the narrative of the business should have some understanding of where we’re trying to go. So when you start to see some of these kind of one offs, that might not be noise, but it may be something we can ignore, because it’s there, but it might not actually be relevant to what we’re trying to do. It doesn’t mean to ignore it forever. But at least for now, it’s not going to be relevant. The second side is you should be able to measure all of that feedback or to at least apply some level of objective stack ranking or prioritization based on whatever your key metrics are as a business. Is it user acquisition? Is it, again, cost efficiency? Is it revenue? Is it profit? Revenue and profit don’t always go together. Is it sheer volume? Is it consumption? Is it monthly active users? Is it engagement per day? You have to know your metrics. And all those feature requests or all those opportunity requests should have some objective, numerical, quantitative measure attached to them. So if you say, okay, what are the most important things we could build that deliver X, you should be able to rank those. Now, that means you’re not going to build other things that may give you other benefits. But that’s where you need to have a strategic conversation about what’s important, when is it important, and how do we rank these because eventually, we’re going to have to draw the line somewhere. And again, I think a sales or revenue team should be responsible for attaching a lot of those dollar amounts to these opportunities, and the product team is really responsible for determining that prioritization and then also asking itself well, if we build A, what does that also enable us to build afterwards? Again, thinking in platform scale sense. Or, hey, we could build A, but A is never going to scale to anything more than A, so do we really think that’s a place where we want to put a lot of product prioritization? Maybe, maybe not. But those are fun conversations to be able to have.
Alex Bridgeman: And do you weight different pieces of feedback based on where that feedback is coming from? Like, I imagine feedback from a five year customer who’s using a lot of the product and is kind of a dead center of the kind of customer that you want might be more valuable than a brand new customer who’s still fairly getting used to your product. Do you have different weights that you assign to different feedback? Or is it more of this kind of dollar weighting that you use instead?
Michael Coscetta: I think, again, what’s the strategy. If you say this linchpin five year customer is going to help us launch this new product, and they’re going to be our launch customer, and to do it, we need to do A, that’s a very different conversation then this customer is not going anywhere, like this is- Yes, I understand their feature’s important, but like we’re trying to go launch Europe or Asia or whatever. Like, that’s more important than what five year customer wants who we know is going to be here for another five years anyway. So you’ve got to be pretty ruthless sometimes at looking at both sides in a constrained environment, which every product team is constrained. Right now, teams are more constrained than ever with budgets where they are and kind of the macro uncertainty. So you’ve really got to know what you’re optimizing against. But if it’s a brand new customer that’s not going to get you anywhere, and they’re requesting a feature, yeah, you put that feature request at the bottom of the list, because, A, there’s no guarantee if you build it, they’re going to sign or deliver what they say they’re going to anyway. And B, sometimes there are just many more important things. But you want to pay attention to the signal because that one, this is to your question before about noise, that one piece of data may be on an island for a little bit. But you know what, three months later, you may get another request that looks the same. And then another one, and then another one. And all of a sudden, you have not just a pattern here, you have a trend. And that trend is something to pay very close attention to and determine is this trend sustainable? Is this an ephemeral trend? Is this a blip caused by something in the market that we could ignore because that macro will change? And that’s where you’ve got to put the subjective hat on it and take up the consulting brain to figure out like what could be driving this, and do we care, and how important is that to the long term nature of what we’re trying to do?
Alex Bridgeman: Building on the macro environment, when you are in an environment like this where times are a little bit slower, budgets are getting constrained, how do you continue to build your sales team and improve as just a sales organization?
Michael Coscetta: I think there are places in your revenue stack that you can predictably go invest in. To me, the definition of an ideal revenue team is it’s got to be profitable, it’s got to be repeatable, it’s got to be predictable, and it’s got to be scalable. And if you have a part of the team that’s not profitable, it’s probably not where you’re going to go invest in the short term. Because maybe again, growth at all cost is not the goal. But if it is, and you’ve got plenty of money, then maybe you can keep investing there and get to the other side. Number two, is it repeatable? Repeatable sales success and revenue channels are, at least in the world of like very senior revenue management, that’s your kind of step one of stability, basically saying, okay, we’ve won customers in this sector already. Let’s just keep going after that sector because we can get some level of repeatability here. And you know what, if we can keep repeating it, it becomes very predictable because then it says, okay, I know what got us to win that sector. So if it worked, if A worked in that sector, maybe B will work in this other sector, and then you start to go grow B and confirm that that repeatability becomes predictable year over year after year. The last is scalability, which is finding the teams that you have that you know you’ve already built all the infrastructure, and therefore the marginal cost of every new headcount is going to go way down. Again, what would cause that? It could be you’ve got a nice referrals channel coming from one sector that you know they’re high probability wins, they’re low cost of acquisition, low cost to support, that’s a place that you want to keep growing, because again, you can show that ROI. Where I think sales teams are going to struggle right now is new markets, new product lines, new verticals that don’t have really clear signs of repeatability or predictability to go after them. Because you’ll never get to scalability in a resource constrained environment like that, not now, because you won’t give it enough resourcing to build the foundation to be able to scale on it later. So that’s how we’ll just start to break apart a lot of revenue orgs. The benefit of a sales team in almost any way is every headcount has a dollar attached to it, either a dollar it’s responsible for, a dollar cost, or a dollar it’s required to produce for the business. And I think it’s an objective way of being able to either prove the team’s worth, or to know that you can’t ask for more resources because the unit economics are not in a place that the business can sustain at that time.
Alex Bridgeman: Yeah, and building on the revenue organization piece, one concept you’ve talked about before is that the sales org is kind of the brains of a revenue organization. Can you expand on that a little bit more?
Michael Coscetta: I think just like we’ve talked with sales ops before, the sales team is speaking to future customers, it’s handing over customers to account management or customer success that you know what they’re going to do next after they launch, if anything. Maybe they’re one and done purchases, or you know what their growth plan is along the way. And sales teams are also losing deals. So they’re speaking to customers who want something here, and your company is delivering here. Well, do we want to go deliver this? Or do we just say, no, we’re going to always lose that? Or you know what, over time, we need to expand our product set to now be able to tackle these different types of customers. And I think what a sales team is really good at, again, is you can measure this along the way. You can see where you’re losing deals, you can see where you’re winning deals, you can see the profile of these deals. That feedback loop should be going back to marketing and to product. Marketing to be able to go get me more of these because we know what’s winning here. And to product, hey, customers love this, they hate this, they love this, they hate this. And that cycle needs to be very transparent as well. Where does it all start? Again, it starts with the customer. If you go back to Jeff Bezos, I think it was 2002 or ’03, where he introduced the concept of the customer at the table, and they put this empty chair at a table and said, what does the customer think? Or what would the customer say? And who knows how much of that is folklore or truth, you never know. But if you’re a customer centric business, which most attest to be, then you’ve got to start and end with what the market wants and what the market needs while also thinking ahead about what the market will need. And you may be wrong at some percentage of time. But you want to ideally try to stay ahead. And the sales team tends to be kind of the panel which all of that information gets thrown along the way. So being able to organize it, consolidate it, synthesize it, and share it is really important.
Alex Bridgeman: One last question prior to closing questions. If you’re a CEO who wants to get more involved in sales or just at least learn a bit more about that process within your company, what are some helpful and productive ways to take part in the sales team and sales org without being distracting or disruptive or affecting a process in a negative way?
Michael Coscetta: I think the simplest is to shadow. And sometimes just to bring the CEO on a call can be daunting. At the same time, it can be incredibly distracting for the customer. So we actually sometimes used to have pseudonyms for our CEOs joining certain calls, especially when you’re CEO was Jack Dorsey. Although sometimes, we would put Jack on and say, hey, Jack Dorsey is on this call with us. And he wouldn’t say anything, but customers would sometimes be starstruck at who was on that call. But I think shadowing is such a critical element. We also used to have the board shadow calls. And there was a very senior member of the board who was 40 years experience in tech, who literally looked over to me after finishing a shadow call with a very junior salesperson and said, “Holy shit, this is really hard.” And it’s like, wow, yes, it is. It is. It’s really complicated. And not every call is positive. And we actually had the co-founder of Square on a call where the customer was complaining constantly about something, and he’s like, “This is all really valid.” He’s like, “I hope we’re doing something about this.” And to have a board member say that I think is not only validating to the salesperson, but it’s levels of insight that they’re never going to get on their own. So, shadowing I think is key. I think, second is from a CEO perspective specifically, what are those key strategic metrics? And if you don’t have them, that’s a big wake up call for the business anyway, whether you call them KPIs or if they’re embedded in OKRs. But those are the questions that the CEO should be able to answer at all times through data. And the sales team should be able to provide data into those KPIs and metrics at all times. And getting alignment there to make sure that what the sales team is doing aligns with what the CEO thinks the business should be doing is simple, but I don’t see enough of it sometimes. And I think that alignment is where go-to market teams start to fall apart when that falls out of alignment itself.
Alex Bridgeman: Moving into closing questions. What strongly held belief have you changed your mind on?
Michael Coscetta: I used to not want to hire generalists. So, I’ll say that. And I used to think salespeople had to come from sales to be good at sales. I think some of the most amazing salespeople I’ve ever had were consultants or investment bankers because, again, they were in charge of just getting into the nitty gritty, understanding a business from the ground up, which enabled them to design that key I talked about before that unlocks that lock. And that was a very important wake up call for me to have much earlier in my career, thankfully, because I think it opened the net. And it’s enabled us to hire people over the years that have come from nontraditional backgrounds but have become amazing salespeople and sales managers. And in a technical environment, getting people that come from a more technical place is actually really, really good to have on the sales side. And I think that’s been really valuable for us over the years.
Alex Bridgeman: Yeah, those are great ones. What’s the best business you’ve ever seen?
Michael Coscetta: It’s going to sound so trite, but I would love to find someone- find me a better business than Apple and what they do and how they do it. And I don’t think it’s their products. I don’t think an iPhone is the best phone in the world, although I wouldn’t give mine up. I don’t think MacBooks are the best Macs. But when you look at a flywheel, and one part that feeds the next, that feeds the next, that feeds the next, and it just keeps you in that loop. That’s what the app store was. And that’s what iTunes was, and all these different features that were built over time really built an ecosystem. And an ecosystem is very hard to build from the ground up. And they did it. I’ll give you a second runner up, which is also probably equally as trite, which is a company that cannot help but just mint money. And that’s Microsoft. And Microsoft was a dinosaur and went through its kind of extinction phase for a bit. And you’re looking at a company that just does not know how to do anything but make money and build really sticky, really complex technology that doesn’t go anywhere. Inside the enterprise world, there’s no one better. And I’ve never met smarter salespeople in my life than the 20, 30 year vets who come out of Microsoft, and they get paid insane amounts of money. And they deserve every penny of it because the money they bring in is 10x what they’re being paid. And I have yet to find a better enterprise sales business than Microsoft.
Alex Bridgeman: Yeah, of the companies you study for best practices and just inspiration for running a good sales org, is Microsoft among them among maybe a couple others?
Michael Coscetta: Yeah, it’s a little unfair when you have the name Microsoft behind you because some of your sales is definitely because it’s Microsoft or because you’re running on dotnet servers or because you use a different part of their ecosystem that this just now bolts really nicely on to. So there’s some level of like self fulfillment to that. I think Google deals with some of that on the software side. If you’re an Apple shop, it’s really hard to convince someone to come in and replace your MacBook with a ThinkPad. So, what Microsoft does so well is it hires really smart, smart people into sales roles, and it pays them absurdly well, so they don’t want to go anywhere. And if you don’t perform, by the way, they fire you very quickly. So that’s not a good environment for everyone. And I get that. But they’re ruthless about performance. And they’re ruthless about paying their top people a ton of money. But it’s also a very calculated sales process. It’s very programmatic. It’s very specific. It’s very detailed. And it’s come from 30, 40 years of experience having sold many of the same products over those decades. Not every company would- we don’t have that luxury. There’s no playbook for us to follow. There’s no one who stepped in our footsteps beforehand that we can go copy. So, for us, we’re always kind of feeling around the amorphous dark, whereas Microsoft is very, very programmatic. And I think they do it better than almost anyone.
Alex Bridgeman: That’s fantastic. What other companies do you study and admire for their sales orgs?
Michael Coscetta: I think you look at there’re two worlds that have kind of popped up over probably the past decade. There’s your really predictable SaaS companies that have a product or a software or whatever it is that you don’t want to ever not have again. So they’ve almost taken this world of like freemium and consumption based demand and scaled it into amazing SaaS. I think Slack is a great example of that. Now they’re obviously part of Salesforce, but I think Slack was that. I think you look at what AWS was when it built- where I remember my friends sitting at a diner table 15 years ago, he’s like, “Oh, hold on, let me spin up another server.” I was like this is a brilliant that you can do this. So I think AWS and Slack were two on that kind of consumption, freemium level that I think really exploded. I think on the other side, you look at like hyper predictive monthly fees, and your enterprise software world, you’re looking at what Workday has done. You look at what MuleSoft did before they also got acquired by Salesforce, you look what Snowflake is doing right now. There are some amazing examples out there. And these companies have taken their own paths. But those are the ones that I would continue to keep an eye on.
Alex Bridgeman: That’s great, thank you. Thank you, Michael, for coming on the podcast. It’s great to chat about sales and hear all about the different things you’ve learned over a great sales career. So thank you for sharing a little bit more. I’m glad Mike was able to introduce us.
Michael Coscetta: Yeah, it was a great time. Appreciate it. Appreciate all the questions, and thanks for letting me join you today.
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