It wasn’t so long ago that sales meant just showing up with a deck and a smile. These days, it seems that sales leaders almost need a PhD in statistics just to get through the typical day managing a sales funnel. From SQLs and MQLs to NDRR and managing overall retention, the roles of VP of Sales and Chief Revenue Officers (CROs) are evolving rapidly in tandem with the best practices of SaaS startups.
Few people know this world better than David Ives, who is a partner at True Search, one of the top executive recruiting firms in the country where he co-leads the go-to-market practice. David has led countless CRO and VP of Sales searches, and in the process, has learned not just what CEOs and boards are looking for, but also the kinds of skills that candidates need to shine in these important career inflection points.
David Ives. Image via True Search
In our conversation, we talk about the evolving nature of the sales org, how leaders can best position themselves for future advancement, what companies are looking for today in new executive sales hires, and compensation changes in the industry.
This interview has been extensively edited and condensed for clarity
Introduction and background
Danny: Why don’t we start with your background — how did you get into recruiting?
David: So my background was definitely unique. I started as an enterprise sales rep of the truest form selling subscription-based data analytics and systems into capital markets, so into investment banks, trading desks, hedge funds, asset managers, portfolio managers — you name it. Then I drifted purposely, intentionally away from capital markets and did about four different growth technology companies. I landed at NewsCred, and it was a neat time — it was really the birth of the startup landscape with the whole Flatiron district in New York.
Later, I was looking for my next CRO opportunity and was networking with some of the investor folks that I knew. I had a friend of mine who was a talent partner at a private equity firm who said to me, “I’ve always thought that you’d be really good at this and we’re starting to push for our search firms to have operators.” I went and met with Brad and Joe [founders of True], and three weeks later I was in the seat.
Danny: That’s great. And what do you do at True?
David: Well, we moved to a specialization model right when I got here. I don’t know if I was the test case or not, but I didn’t know search, so my skillset was that I knew the role. I run our go-to-market practice with another partner, and we have probably 40, 45 people in that group. We focus exclusively on sales, marketing, customer success, we’ll do biz dev. I probably skew more to CRO than anything else, but I do CMO and VP of marketing as well, and then I do a handful of business development, chief client officers, and VPs of customer success a year. That’s my mix basically.
What is the skillset of a modern CRO?
Danny: You’ve been in the sales leadership space for a long time, and you’ve been in the recruiting space for a couple of years. What are some of the changes that you’re seeing today in terms of candidates, skills, and experiences?
David: I think a big change has been from what I call a backend pipeline manager to what I would call a full funnel manager.
Traditionally, I think enterprise sales leaders were very much big deal and quarterly to yearly driven. They’d be very client facing, very frontline facing, “give me your call outs.” Then you rolled up those numbers and you took a little haircut to that and that’s the call out that you gave to your CEO, right? And then you live and die by those deals and you hopefully have enough in your pipeline.
That leads to really lumpy performance in many ways, but I think if you’re a fully-baked, large company, it works because you’ve got scale. For scaling growth technology companies though, you need to have a much more predictable revenue model, so I think you’ve seen this much more instrumented sales and revenue leader as a result.
Danny: What does a CRO do to acquire that predictable revenue?
David: There is a debate about what exactly CRO means, right? I think it definitely means you own sales and customer success, and I think marketing is the holy grail but I think that’s a pretty big stretch. I think what it really means is you want a CRO that if they don’t own marketing, at least they are an incredibly strong partner with a track record of working with a CMO on demand gen and field enablement.
You want someone that knows the top of the funnel, and by that I mean someone who understands MQL [marketing-qualified lead] to SQL [sales-qualified lead] conversion, they understand in broad strokes CAC [cost of acquiring a customer] and what it costs and what channels are working and how to optimize them.
I think it then goes into that middle funnel management. Understanding what MQLs are coming in, building an SDR [sales development rep] machine that knows how to work those leads, and looking at really managing those conversion rates to be able to say, is marketing bringing in the right leads? Is sales working these? Where should we invest more? Which one should we tune up? Which ones should we dial back?
I think a lot of people use metrics to move under-performers out, but the truth is there’s a lot of data there, right? An example being, let’s say your average rep is first meeting to opportunity to closing is going at the standard 25%. Then you’ve got one rep who’s actually a really good closer but his or her conversion rate on first meeting to opportunity is like 15%. Well, what’s going on in that meeting? How can you improve coaching there?
These are things that the backend traditional enterprise leader misses. You need the backend funnel, it’s obviously incredibly important, but you can’t have your sole focus there.
Ultimately, we look for people. It’s not unlike sports, right? If you look at sports management today, it’s gone from scouts and general managers that were former players that had a really good gut feel for a player and what their skills were in predicting their success and how to draft them and bring them up the organization. I think now, you have all these analytics and metrics and it’s melding the two together. The same exact thing has been happening in sales and marketing and customer success for the last five to ten years. I think what’s required in today’s market is people who understand that and that know how to bring both sides of that together.
Transitioning from older to newer models of sales
Danny: Do you think that there is a difficult transition from that older model, which isn’t actually all that old, right? It’s just in the last couple of years we’ve really doubled down on this data-driven sales approach.
David: It’s hard, it really is. It depends how long you’ve been at it. I really went through it and I found it challenging. But in the end, it’s actually more comfortable once you make the transition because you feel more confident that you are making the right call outs, you’re making the right hiring decisions, you’re getting the right training and so it really does work. It can be done.
I think the problem is that the companies that are hiring want someone that has a proven track record in doing it. People that are trying to make the transition have to find a way to present themselves in a way where they’d get the opportunity.
Danny: How would they do that?
David: Sometimes it’s taking a regional role under someone who is really good. But I think there is plenty of material out there on the web through webinars where you can arm yourself and begin to apply it where you are today.
Moving across verticals
Danny: One question I’m curious about is how fungible are candidates across sales positions or CRO positions? If I’m well-instrumented, I know how to handle my MQLs versus SQLs and I have some experience, but let’s say I was in data analytics SaaS and now I’m looking at say a healthcare SaaS company or something. Does domain experience still matter?
David: Yeah, every search we ask this. It’s the domain versus business athletes. I would say 70% of the searches are open to the business athlete, and kind of want that. They want the best of breed at the job and less the domain.
Now look, there are certain industries where domain is important. There are certain life cycles in a company where domain and someone bringing a book and that really knows how to talk to their clients is key. Or if it’s like a category-creation type of sale, where the messaging is super important — that lends itself to domain.
I do think the big divide is a business athlete can go a lot of different ways. I think there are what I would call back-of-the-house sellers and in-front-of-the house sellers, right? If you sold into the IT, CSO, CIO, or CTO orgs your whole career, I don’t think it translates well to then go over and sell to a CMO, right? Those are very much different rhythms. But I think within those super broad categories, it works fine.
Danny: How often do you try to grab someone who already has the existing title versus trying to upgrade someone from VP of Sales to CRO?
David: This is the other side of the domain versus athlete. This is the up-and-comer versus the been-there-done that. Most people say they want the been-there-done-that. It feels good to get someone who’s driven something from 20 to 50 million in revenue and then they, say, have gone from 40 to a hundred million. They have a playbook, and they can point to it and tell you where the challenges were, how they did it, etc.
The difficulty with that strategy is that most of the people, particularly people that have driven something to a hundred million and had an exit, they then want to be a COO or a president or a CEO, right? But then convincing them to go back to do something at 20 million when they’ve just spent four years doing this major lift is just hard.
On the other hand, when we talk up front, we say, ‘Look we understand that there’s the center of the bullseye. But there are incredible number twos who have been head of Americas or run the East Coast or the West Coast or run Europe, who have sat underneath, carried a major part of that load, are highly instrumented, are incredible at what they do and they’re ready for the next step.’ It’s a bit of an unknown, and it’s a bit of a gamble because they haven’t done it, but it’s a pretty safe bet.
We try to get one or two of those candidates in to let our clients see that. Then ultimately it’s up to the client, but I happen to believe in both. I think in a good search, you have to show clients both.
Search timelines and the competitive talent marketplace
Danny: Let’s say a startup or an investor on a board comes to you and says, “Hey, we have a CRO position.” What happens next? What’s the timeline for the search?
David: I do think the timelines have moved. In the last year, it has moved from probably like 90 to 100 to 120 days. We caution them, like, “Brace yourself for four and a half months.” It’s just a very competitive market right now. Candidates are looking at multiple opportunities and if they’re not, and we test them when they haven’t and we’re their first look, they’re probably going to go validate in the market. It’s just a candidates market right now, that’s a fact. I think anyone who tells you that we could find you one in 60 days is just selling you.
Candidates want to know that it’s an exciting opportunity where there’s a good team, the product has product-market fit and it’s something that they can drive, and that there’s a good outcome that they can come in and do what they do well. They want excitement around the category and the product. Then they really want to understand the role, right? Because you will see CRO roles that are basically over-titled, glorified VP of sales roles. You’ll see VP of sales roles that are more frontline manager roles, right?
Danny: So there’s a difference between a… let’s call it a “true” [pun intended] CRO versus a glorified VP of sales. What the hallmark distinction between those two?
David: I think when they really literally just want someone to own sales, SDRs, sales ops, and maybe partnerships, but they don’t have customer success or marketing. That’s a VP of sales role.
You’ll see this a lot today because there is a growing confusion around customer success right now. Customer success is pretty broad, right? You’ve got the account management function, the client managers, they’re there to retain revenue, but they’re also there to help do cross-sell and upsell. Who does that? Is that sales, is that the account manager? Then you have the onboarders, because the first 30, 60, 90 days of usage in a SaaS product is so important and you want those people laser-focused on getting adoption and usage out of the gate. Then you have support, right?
That starts to get pretty far away from what a revenue leader is good at. That becomes a little bit closer to product. It’s interesting and I think companies are struggling to define this role, particularly ones that have a complex delivery and/or a service part to their business.
I think often with product-based or engineering-based CEOs, they want someone who can come in and just run the whole side of revenue. I think some CROs are capable of doing that, but it’s a pretty big stretch to think a CRO can do all of it.
CRO compensation trends
Danny: Got It. When you think about the compensation patterns you’ve seen in the last couple of years. You mentioned it’s a candidates’ market, I mean, is that changing in terms of salaries, in terms of equity, in terms of some other component of the compensation package that you’re seeing?
David: Yes, there’s no doubt about it. I would say I think sales has been on a pretty linear natural progression, meaning like, I don’t think Chief Revenue Officer or VP of sales has spiked an order of magnitude, but more like 50%. I think it’s been on a pretty natural progression, but it’s definitely… it’s spiked up one notch.
I think the one that has moved pretty dramatically though is the CMO. It’s just so competitive for CMOs and VPs of Marketing and their packages are rising up at a larger rate.
Common CRO candidate mistakes
Danny: Looking at candidates, are there common mistakes that people make that they just shouldn’t be making in 2019?
David: I’m always surprised at certain leaders who go in and don’t actually listen. Because that’s a cardinal sin, and that to me is shocking that it can happen. But I think that’s more of a basic interview skill thing, but always be an active listener.
Another one I’ve seen is like, “How have you worked with marketing in the past?” and people were like, “Oh, well our marketing department is no good. They don’t know how to do it … they don’t bring any leads. We have to do it all ourselves.” That is not a good answer in today’s world. That just automatically paints you as someone not well-instrumented with the rest of their team, right?
They’re probably not a modern seller because the answers should be, even if you’ve not worked with someone that was maybe an A+ marketer, it should be “Well … I’ve been a little disappointed because frankly, marketing is so important and I really believe in demand generation and where we struggled was with this, and this is why we struggled.”
Some final thoughts on the future of sales
Danny: Got It. I covered a huge amount of ground. What am I not asking about? Are there other parts of the business that you know are unique either just to sales versus some other functions?
David: I think that there are some interesting things developing around who should own what, and where the handoffs are and how you do org design. I think we’ve had phase one, maybe phase one and a half to two of the SaaS revenue leadership and that was a lot about metrics and sales methodology and predictable revenue, right? But how do I build this machinery so we can really manage out the lumpiness or know with very good conviction where our revenue is coming from and what we’re going to book quarter-to-quarter, year-to-year so we can invest in the business properly.
I think now I’m beginning to see in my mind where are the areas that we can think about different reporting lines and how we actually optimize this, right? That conversation we had about customer success: Is product better to own support and services? And where do these pieces fit in with marketing? Do you split marketing apart? Is demand gen and field enablement part of sales or is that marketing? Does product marketing belong in product or in sales or in marketing?
I think there is going to be a lot of interesting debate around that and the next phase of this in my mind.
Danny: Awesome. David, thanks so much for chatting today.