Sam Blond: Why Startups are Doing Outbound Wrong and How to Fix It | E1139

Intro (0s)

• Sam Blond, an experienced tech sales professional, discusses the challenges startups face with outbound sales and provides solutions to improve their approach.

Entry into Tech Sales (1m15s)

• Sam Blond's entry into tech sales was influenced by his brother, who was working in the Bay Area.
• He joined EchoSign as an SDR, a successful tech company that allowed him to progress his career.
• Sam realized his passion for tech sales early on, as he was able to differentiate himself from peers and found success in the role.

Lessons Learned from Early Career (3m10s)

• Sam Blond reflects on his early career and the importance of choosing the right company to join.
• He emphasizes that the success of a startup is highly dependent on the founders' ambitions and aptitude for building a big business.
• Sam highlights the importance of recognizing exceptional founders and their potential to build successful companies.
• For companies with 100-500 employees, there are objective signals to assess their trajectory, such as hiring trends, fundraising activity, and revenue growth.
• In earlier-stage companies, the success is more subjective and dependent on the founders' qualities and ambitions.
• Sam shares his experience of recognizing exceptional founders and being drawn to their potential, even when the specific business idea may not seem particularly exciting.

Sequencing Sales Hires (7m13s)

• Sales roles can be challenging, especially in enterprise sales with long sales cycles.
• Even in successful companies, there can be significant performance discrepancies among sales representatives.
• Sales performance is more objective compared to other areas of business, making it easier to identify top performers.
• Being in a successful company does not guarantee easier sales or greater success.
• To achieve personal success, sales representatives need to strive to be the best, regardless of the company's performance.

Sales Hiring Process & Profile (9m27s)

• Start by hiring two individual contributor account executives (sales reps).
• Once you have two successful individual contributors, hire more individual contributors and your first sales leader in parallel.
• Don't hire SDRs before hiring a sales leader as they need a lot of hands-on management.
• You should have a handful of non-friends and family revenue-generating customers.
• You should have a repeatable process for generating more customers.
• The number of customers you need may vary depending on your business type.
• As the founder, you should be able to close customers and generate revenue before hiring a salesperson.

Sourcing Sales Candidates (13m3s)

• Early-stage startup experience is essential for first-time account executives (AEs).
• Hire candidates with a proven track record of success in similar deal sizes and company types.
• Avoid prioritizing domain knowledge over other important qualities.
• It's not necessary for candidates to have worked at a company that achieved a multi-billion dollar valuation.
• The speaker has five years of experience in the startup scene and has observed numerous startups and individuals.
• When the speaker joined Rex, they had access to a large network of experienced AEs for recruitment.
• In the past three years, the number of experienced sales representatives with startup experience has grown significantly.

Onboarding Sales Reps (19m13s)

• Founders often struggle to hire salespeople because their networks lack sales professionals.
• The best salespeople prefer to join companies where they are known and respected, rather than going through third-party recruiters.
• Founders should tap into their personal networks, including former colleagues, investors, and successful hires, to find sales candidates.
• It's better to hire a good candidate now than wait for a perfect one in the future.
• Founders should determine which qualities are essential and which are flexible when hiring salespeople.
• Case studies can be used to assess candidates' sales skills.
• When extending an offer, it's important to discuss compensation expectations, which may include a mix of salary and equity, especially for early-stage startups.
• Effective onboarding involves providing new hires with the information and resources they need to succeed.
• Measuring a sales hire's success should include objective metrics like revenue generated and subjective assessments of effort and attitude.

Measuring Success & Performance (29m28s)

• Measuring success in startups with long sales cycles can be challenging.
• Key metrics to track include the number of opportunities worked on and the time it takes to identify a good hire.
• A good hire should be evident within 30 days, not 90 days or a quarter.
• Performance issues should be addressed early on to avoid a negative impact on the team.

Hiring Mistakes (33m13s)

• Ignoring concerns during the interview process can lead to hiring mistakes.
• Team dynamics and cultural fit are crucial in sales, as negativity can spread and affect the entire team.
• Hiring someone who meets quotas but brings negative baggage can be detrimental to the team.

Diagnosing Bottlenecks in Growth (35m10s)

• Startups often misdiagnose the bottleneck to growth as conversion rates when it's usually around demand generation and opportunity creation.
• Focusing on generating more demand is more effective than solely increasing conversion rates.
• Startups should focus their resources on generating new demand rather than just relying on conversion rate optimization.
• Horizontal products that target a broad customer base often face challenges in resonating with customers, and sales playbooks should be tailored to specific industries or customer segments to be effective.
• Rex's key differentiator was its underwriting model, which used the cash balance to issue credit instead of relying on personal guarantees from founders.
• Brex was not the first to use this underwriting model, but it was the first to explicitly brand itself as a corporate card for startups, allowing it to gain significant market share in the technology startup segment.
• Brex followed the "innovator's dilemma" approach by targeting a small segment of the market with a highly differentiated product, gaining market share, and then expanding from there.

Importance of AE’s Sourcing Revenue (42m13s)

• Salespeople should be responsible for generating their own demand, often through outbound methods.
• At Rex, AEs were sourcing more of their own revenue than SDRs, despite spending less time on outbound.
• AEs had higher conversion rates and generated higher revenue opportunities because they had a better intuition for what a quality opportunity looked like.
• Rex changed the compensation model for SDRs to incentivize them to source more revenue.
• AEs should be spending their excess time sourcing their own deals, as it has a higher ROI than other activities.

Outbound Strategies (46m19s)

• Most startups are doing outbound wrong.
• The right approach involves targeting the right people and using contrarian methods.
• Start with the closest concentric circle to your business:
  • Your personal network
  • Investor networks
  • Employee networks
• As you acquire customers, leverage them to generate additional customers.
• Use contrarian outbound efforts to stand out:
  • Send a bottle of champagne to celebrate a recent fundraise.
  • Handwritten notes.
  • Physical delivery.

Scaling Sales Function with ACVs (52m4s)

• Companies often have intense SDR AE sales functions and CS functions with ACVs of $10K, but this rarely scales.
• Layering on Enterprise cost-based for a very SMB PLG revenue base born out of the PLG motion leads to companies having poor economics.
• The approach to acquiring customers and the amount spent on it should be influenced by ACVs and LTVs.
• Different customer segments require different approaches to acquiring customers.
• Spending a lot of money on acquiring customers who generate low revenue is not sustainable.

The Role of AI in Outbound (54m4s)

• With the rise of AI, the amount of outbound messages sent will increase massively, potentially leading to the commoditization of outbound.
• AI tools are making outbound more effective by streamlining manual processes, but they have not eliminated the need for human SDRs or AEs.
• AI can personalize emails and write copy, but it still lacks the creativity to come up with unconventional outbound sales campaigns.

The Importance of Human Creativity (56m30s)

• To differentiate outbound strategies, brainstorm contrarian ideas with key team members and implement the best ones.
• For events, use unique tactics like handing out breakfast burritos or incorporating your product into a magician's tricks.
• Utilize offline advertising methods like billboards or partnerships to reach your target market.
• Create an incentive program where customers who share positive onboarding experiences on LinkedIn receive a gift card instead of paying for online ads.
• Organic posts on LinkedIn can be an effective way to build brand awareness.
• Billboards can enhance brand awareness and support outbound email campaigns.
• Brex's decision to open a restaurant and lounge was a costly mistake that diverted resources from the core business.
• Sam Blond highlights common errors startups make when implementing outbound strategies.
• Brex's concept of establishing MX lounges globally failed due to the absence of a network effect and brand recognition.
• Acknowledging that not all creative ideas will succeed is essential, and it's better to try and fail than not try at all.
• Celebrating failures can foster learning and growth.
• Limiting potential losses is crucial to prevent substantial financial setbacks.

Quick-Fire Round (1h8m46s)

• Discounting should be used strategically to accelerate deal cycles and prevent customers from considering competitors.
• In-person sales can provide a significant competitive advantage, especially for startups.
• Salespeople should not rely solely on marketing and demand generation for leads and should put in the effort and work hard, especially in early-stage startups.
• Startups should focus on small, thoughtful actions that set them apart from the competition, such as sending personalized thank-you emails and highlighting areas for improvement.
• Consistency in these small actions can help startups stand out in a mediocre market.