Episode Transcript
Speaker 0 00:08 Welcome to the rogue startups podcast. We're two startup founders are sharing lessons learned and pitfalls to avoid in their online businesses. And now here's Dave and Craig. All right, welcome to two
Speaker 1 00:21 Oh six of rogue startups. Dave, how's it going?
Speaker 2 00:25 Pretty good. How about yourself today, Craig?
Speaker 1 00:28 I am doing good marinara home stretch of the last week of, uh, of school before a two week break. So I'm terribly trying to get a bunch of work done before that. Kids are around the house for two weeks straight and I don't get anything. <inaudible>
Speaker 2 00:40 it's crunch time. Yeah, yeah, I hear that one.
Speaker 1 00:44 How about you? How was uh, how was the conference last week?
Speaker 2 00:48 Big snow was awesome and you know, again, it's not a conference, it's a mastermind retreat at this point. Cause a, you know, conference sounds like it's got a public invite and now at this point we're definitely private, you know, invite only kind of thing here. And I think that's been super valuable to have that kind of, well, what am I, what's the word I'm looking for? I guess repetition, just to have, you know, basically it's an in-person mastermind. And the one, you know, my one complaint about big snow is that we just don't do them often enough. And that was something that we actually talked about and tried to address this year and tried to figure out some solutions for it. So I'm actually going to try to have a second, I can't really call it big snow if it's in the summer, but going to have some other tiny comp later in the year and it'll be another invite only thing.
Speaker 2 01:39 So if you've been, if you are on the big snow list and you've received invites from me in the past or you're an alumni <inaudible> submitted an application and your application, you know, fits a general business profile, that's going to be a good fit with the groups. So that means, you know, you're making more than a thousand dollars a month in MRR and you've been running a SAS for a while and you're struggling with specific issues, you know, as opposed to trying to get <inaudible> going, not sure what your business idea is. Those aren't really a good fit or you're running something like, you know, an agency that doesn't have the same kind of concerns that we have as SAS owners, then you know, I'll probably send out some invites there asking to fill in those gaps. Cause it sounds like about maybe half the people I guess from big snow would be able to attend if I did something in like August, September, somewhere in that timeframe.
Speaker 2 02:35 So yeah, we'll see. It'll probably be somewhere in the Colorado mountains. I'm thinking Breckenridge right now, although I don't have a hard, a hard destination on that. But you know, it'll be the same kind of format. Uh, two or three days hanging out. We'll get a house in the mountains, we'll have a fire pit up there, you know, we'll go do some activities during the day, like hiking or paddle boarding or mountain biking or something. I don't know. I haven't nailed all those details down yet. Uh, we'll stay in a place, we'll probably get some catered food so you're not having to worry about, you know, making meals and things like that. And we'll just talk business. So, you know, that's exactly what happened with big snow this year. And you know, while I can't, because it's a private mastermind sort of thing, I can't really share all the details of what was going on there.
Speaker 2 03:26 But you know, there's a lot of bearing of your soul. I mean people showed P andL statements and talked about actual profit numbers and you know, very private intimate stuff. But when you get to that level of detail, it is, it's super awesome to be able to have real discussions around those things because it really makes it so that no topic is off limits, whether it's mental health or your profit numbers or what you're struggling with personally with your family or just whatever, you know, anything that's holding you back. And it gives you a forum to vent those things out and to, you know, get some suggestions from the group and things like that. You know, we had, it was interesting, you know, because we do have that familiarity with everybody in the group. I'd say the first few sessions, mine in particular, there's definitely a lot of, you know, people jumping on you for, Oh my God, why aren't you doing this?
Speaker 2 04:22 Or Oh, you're such an idiot for missing that. And you know, it's not done with malice or anything like that. It's done with <inaudible> with love and trying to make you better at what you're doing. But you know, it became obvious that it's one thing to say you should be doing this as opposed to, so I tried what you did there and here was my outcome and I didn't feel like it was very good. So maybe you don't want to do that for these reasons. It's a subtle distinction, right? Um, so on the lift with Robert Hartline who does call proof and some wireless stores out in Tennessee, he also runs a call center down in Costa Rica and, and a lot of other cool things. Anyway, so he's part of EO, the entrepreneurs organization. He was talking about, uh, their notion of gestalt, which is basically talking only from, or offering advice from your experience as opposed to just offering random advice where you can look at somebody's sales numbers and be like, yeah, you should charge more.
Speaker 2 05:26 But if you've never actually done that, if you've never gone through the pain of a price increase, it's difficult for you to offer that advice and really understand what the implications are for the other person. And so gestalt is basically trying to filter your advice, giving instinct with the intent of provide some context, give some outcomes, talk about your, you know, a situation and why it did or didn't work so that somebody can look at that and say, all right, well my situation's the same or my situation is different, or that doesn't apply to me. Or Oh my God, that would be so relevant except this other thing, which is totally irrelevant. And that I think improve the later half of our talks. So I think that's something that we're going to incorporate into the beginning of next year is to sort of remind everybody to talk about things from a gestalt perspective.
Speaker 1 06:22 Yeah. This is something that, uh, in like the tiny seed calls that Rob has really insisted on from the beginning is, you know, don't, don't just spout off about something you think or that you heard Patrick McKinsey say her whatever. Like if you haven't done it, I don't have firsthand experience. Don't talk about it. Don't talk theoretically. And I agree. I think that helps filter out a lot of the things that might not really be applicable. But you as the person wanting to give advice in helping your friend think might be applicable because you think you know what you're talking about. And not in a malicious way at all. Just a lot of us don't know. And if you haven't been there, then you probably don't know.
Speaker 2 07:00 Right. And this is part of the reason why we don't just leave big snow open to anybody. Because if you don't have a certain level of experience in your business, it's not really, you know, we want everybody to be equal contributors and participants as well as to get benefit from the conference. But if you're there and you don't have a lot to contribute, then you know it's very one sided and that's, you know, it's the same thing with a mastermind group. You wouldn't invite somebody who was a complete beginner into a group of people that are making 30 K MRR. There's such an imbalance between those two that it's going to be very difficult for both sides to really enjoy that exchange. But if, but if everybody's kind of in a similar range, then it's way more productive. It feels better. There's definitely higher quality of interaction that goes with that.
Speaker 2 07:47 So, you know, I don't want to <inaudible> you know, being at the beginning of business cause that's not, that's not what I'm trying to say here. It's absolutely the case that if you're starting out, you should find some other people that are maybe a little bit ahead of you and get, you know, a mastermind, something like that together. And then everybody can still benefit because you're, you're not so far apart in your perspectives at this point. And you know, maybe it's great to get some outside perspectives, occasionally bring in somebody who's way ahead of you. But even then, you know, if you're using gestalt, that experience may not apply to where you're at in your business. Like you can't take sales techniques from a, you know, a seven figure AR business and apply that to a bootstrap startup making less than a thousand MRR a month. That just doesn't work.
Speaker 1 08:32 Yeah. And it goes, I think it goes both ways, right? Like a newer person in their kind of journey would be just overwhelmed with what people are running, million dollar businesses you're talking about. And the other way people running seven figure businesses would, would say, you know, you know, Hey you, you're a nice guy. But you know, we just don't have a lot in common from a business perspective. I think it definitely goes both ways.
Speaker 2 08:52 And you know, big snow, we've kind of worked that all out. So if you're showing up to big snow at this point, you're an equal contributor because we know that you've got as much to offer as you do to learn. And I think everybody that was there felt like they were getting quite a bit out of it. But the adding that gestalt aspect to it, I think really improve the interactions there. There was also, yeah, that, that was a major improvement this year. The other thing that we did that kind of took some of the pressure off the time pressure off cause we're getting people from way disparate time zones. So we had Brad Turner this year from, uh, delicious sprains and he's out in Nova Scotia, which is like East coast plus one, I forget what that time-zones name is, but it's, you know, the Atlantic time, the Atlantic time, the frickin crazy Canadian time zone.
Speaker 2 09:36 Um, yeah. So, and he's in Atlantic time. We've got people out in Pacific time. So we're talking, you know, four hours of time difference here. And it's easy. Me a fucking river, Dave, cry me a river. But you know, when you're, when everybody flies in here to mountain time, you know, everybody's off except for me and rich and JD who were the guys, uh, that all lived here in Colorado. And because they're off, you know, people, some people want to stay up later. There was a lot of people in Pacific time that were like, yeah, we can stay up til 11. That's cool. And then the people that are like Eastern time time, nine o'clock rolls around, I mean, they're ready to cash it in. They've already stayed up past their bedtime and you know, people are missing later sessions. So we had to move a couple of the sessions this year.
Speaker 2 10:18 It's a Monday and used to be that the Monday sessions were, the Monday session I should say was more of a get to know you kind of thing. But after you've been doing the same people for several years, but get to know you part's not so valuable anymore. Like, I mean, it's cool to hang out, but inevitably last year all we started talking about was, okay, well what are you doing in your business right now? Which basically led to an impromptu session and everybody was like, we should have just done sessions tonight. And I'm like, okay, we'll do that for next year. So we did two sessions this last year. Yeah, this last week. And I think that really helped cause it took the pressure off at the end of the day. So the folks that were East in Atlantic time zones were, you know, ready to go to bed and that was fine. You know, if you wanted to go to bed at that point, you didn't miss anything.
Speaker 2 11:07 But everybody else that's still wanting to stay at that was cool too. So, and we also had some really Epic fucking conditions when we were up there. It snowed the day that everybody headed up. And so we had like six or seven inches of fresh powder the first morning. Oh wow. Yeah. And then the second morning it was groomed. So it was still high quality snow, but equally good conditions. Just a very different feel on the mountain. Yeah. So everything was like super fast and awesome. And, uh, the, the problem was on Thursday when everybody was leaving, uh, it totally fucked with us because there was a storm that was moving in that was supposed to be blizzard conditions across two passes and most people had to catch flights. So that meant that people were getting up at like four and five in the morning to on shuttles and get the hell out of Dodge.
Speaker 2 11:55 Yeah. Make it all the way down in the mountains. I left close to S to eight o'clock, seven 45. And you know, Vail pass was a hot mess by then and it was pretty scary going over it. Not quite as scary as the year before where I encountered total whiteout conditions at the top. Uh, yeah, I mean, uh, whoever managed to get eh to a ski area that day and stay there had a really Epic two or three days because by the time I got down to Denver, then blizzard did the next day and shut down schools. Then nobody can get up the mountain. Nobody could get up the mountain. So if you are already there, you had like an amazing ski day. I'm sure it was like a blow your mind kind of powder day. So yeah. Yes, it was definitely a good year. Good year. That's cool. That's awesome to hear.
Speaker 2 12:42 That's awesome to hear. Yeah, I, uh, I had somebody reach out after our last episode and asked me about our SAS retreat. So SAS retreat.com was something I was going to put on this year, but we're tiny seed in the retreats we've been going on there. I postponed it, but it is very, definitely gonna happen this coming September in the South of France. Uh, so we have, uh, folks who want to do is a big snow, tiny comp kind of thing, but not skiing. But, uh, we're going to go to the South of France around the Vaughan Dodge, which is the time where they pick the grapes for wine. Um, yeah, so it should be a six weeks before Microcom for Europe, which I think is a cool time. So anyways, anybody who wants to do a big snow, tiny camp kind of thing. But without skiing and the more the drinking South of France Saster tree Sasser street.com we're going to start putting some stuff together here soon.
Speaker 2 13:32 Nice. Nice. Yeah. Cause I mean no, I mean those, those small conferences and mastermind, you know, talks are great and have done wonders for, for my business. Sounds like it did a lot for, for years. And the other folks over there, are there things that like you take away that, that you can share that you are going to be like implementing? Yeah. You know, it was interesting this year. So the one thing, so I was raising what my strategies were for the next year and I was talking about platform expansion and partnerships and integrations and things like that. And the feedback that I was getting from the group was why aren't you doubling down on Shopify? And then somebody pointed out to me later. So we had that whole discussion and I basically said, you know, I feel like I've done a lot on Shopify here and if I really want to see the kind of growth that I saw this last year, expansion is in order.
Speaker 2 14:25 But you know, the group did not agree with my assessment on that. And then somebody pointed out to me that two years ago when I was saying, yeah, I want to integrate with Shopify, I want to move on to that. Everybody was saying you should double down on Magento. And I completely ignored that advice of course, and went to Shopify and that's where all my growth has been. So this is one of those things where I think the gestalt, it kind of comes into play, right? So people were saying, you know, you're, you're losing focus in whatever, because either they looked at what I said and that said, well that's not what I would do. But that wasn't necessarily like if somebody who had done e-commerce expansion had looked at, okay, well where did we get success out of this? We did this by these integrations.
Speaker 2 15:12 And that's what I've seen other people in e-commerce doing. So that's what I ended up doing anyway. And you know, I had another conversation with Brian castle about the same thing and you know, he said, well I kinda got the same contrary advice that you did do this one thing. And then Brian was like, well no, probably not going to do that at all. So, you know, sometimes it's about knowing whether the advice is applicable to you or not. And you know, in this case this year, I mean, I have some things that I'm working on that I think were good suggestions that I've added into it, but I didn't think it really changed my overall strategy. You know, I'm going to do these integrations, I'm going to set up these partnerships because you know, Wu is still larger than Shopify. So if I can increase my penetration into the Wu market, I'm going to have a massive uptick in growth as a result of that and open up a new channel.
Speaker 2 16:06 It's not like I'm ignoring the Shopify channel, but I don't know what doubling down on Shopify really looks like. There was this, you know, notion of if I was doubling down on Shopify, that was somehow less work than if I integrated other platforms. And realistically that's not the case. Uh, integrations are actually easier for me than to say build a Shopify app that allows me to reach out to other Shopify users and then do cross selling between the two. Right. That's a fair amount of work to build a whole new app as opposed to I'll just take my seven hooks that I need to build and integrate them over here on WordPress or set up a partnership and work on that. So, you know, I mean there was definitely some contention about what was effort that should be well spent and what shouldn't be. You know, that was, that was interesting this year.
Speaker 1 16:58 Yeah. I think the, the, like the mental model there is like a lot of developers especially, but, but just everybody in general wants to blame the technology or buying basically anything but sales and marketing for why their business is not growing fast enough. Me included for sure. Uh, is, you know, if we had this thing then whatever. And that's pretty much like never true. I think, you know, like if you integrate with woo commerce, you're not going to have a $10 million business next year. It might help. But I think ultimately like sales and marketing are the things that are going to make you successful, make all of us successful, uh, assuming that the product has some kind of level of feature parody and product market fit. Oh, sure. So I think it's, it's definitely a balance and like we look at resource allocation, I think that's where it comes in and we're looking at that a lot.
Speaker 1 17:46 Like right now with Casto psych is product quote good enough, you know? Uh, and if the answer is yes, then basically everything we should be doing is in, you know, sales and marketing and like customer service and retention. And honestly I think like our time, like my time and our dollars spent on people are going more into sales and marketing now then they were in product in the early years. So I think that's just kind of like how again without giving you specific advice, cause I haven't been there, I haven't been like a platform dependent, uh, you know, business. But, but that's what I would say is like, yep. Other integrations like woo commerce probably can help. I wouldn't bet all of your time and money on it because you still are gonna have to figure out how to market to those people. Just being in a platform doesn't, doesn't do it all for you, you know?
Speaker 2 18:33 Absolutely not. No. No. And the platforms that we are targeting for next year or this year, I guess we keep saying next year, but we're already in next year. The ones that I'm targeting here have specific things like app stores where there's traffic that's already there. And it, given what I've seen in that app store, it's relatively easy to rank inside of there because there just aren't that many apps for your category and you can be in multiple categories. So that sort of thing just seems like low hanging fruit to me. And you know, there's other things like partnerships. I've been working since last August to get a partnership with this WordPress hosting company and you know, things are finally moving forward on that. And if I get this partnership, it puts me in front of, you know, anywhere between 3000 and 10,000 WordPress installs that all have WooCommerce on them. So, you know, that's not small potatoes.
Speaker 1 19:27 Yeah. Yup. Nice. That's cool. That's really cool. How are things going with you? Things are going good man. Things are going good. I've been, you know, I've been talking on the last few episodes, uh, about kind of my, how I spend my time kind of in work these days. And no, it's going like really well from that perspective. Am less stressed than I was before because I'm delegating better. Uh, and the teams are, are running really well. Yeah. I, I feel, I feel really good about it. I think one of the things that that is challenging with that is like when the team isn't successful then like looking at what I've done, two to prevent them from being successful. And that's hard cause then like, you know, if you give them shitty information, they do the job, that isn't what you're looking for. It's not their fault.
Speaker 1 20:18 Right. It's your fault. Uh, and so like this is the thing I'm the worst at is like standard operating procedures and writing a good spec for a product or something like that. And just like it's against my, I'm not like super detail oriented and so it's against like that part of my DNA. But if I say I'm not going to be the one to fulfill these things in the business anymore and I, I can and should be like delegating most of what the businesses to other people cause we have, did, we have almost 30 people that report to me now in one way or another. Yeah. And so I just can't be doing, you know, the fulfillment level of a lot of work. Just cause there's not enough time. And I think that's when I get super stressed is when I do get in the weeds too much.
Speaker 1 21:03 And instead I'm trying to just, yeah, we use models and decision matrix is that I share with people instead of like making a decision to say, Hey, next time you're faced with this decision, these are like the guideposts. Right. And I trust you to make the decision, come back and let me know how it goes basically. And it's, it's going pretty well. Cool. Cool. Yeah. You know, since we, uh, so I did an episode while you were gone last week with Jake Jorgen, which was really cool. Uh, he runs two different products I services. So we talked a lot about productized service and a little bit about sales. But in our last episode you and I talked about sales a little bit. I thought it'd be good to dive in a little more to, to sales. I think it's a big thing that, especially like the more technical folks have been done before, but know that it's like a big driver of businesses, especially for like higher customer lifetime value on types of products and services.
Speaker 1 21:52 Okay, cool. Let's dive in. Well, let's dive in. Yeah. So I think first, uh, Addie wrote to us on Twitter, um, about like the threshold above which a sales starts making sense and uh, he said that his kind of rule of thumb was like $5,000 customer, customer lifetime value. And so that's, I think that makes a lot of sense. Like for us at podcast motor, a lot of our customers are above that, so that's cool. I think that's where sales starts making sense. And like when I talked to Chris, our sales rep more and more, he's wanting to focus only on customers that he thinks really have the potential to have that in like our first deal cause for selling some, some like bigger packages these days that are, that are going for thousands of dollars. Um, and so he even is saying like, I'm a salesperson. I don't want to be selling somebody a $200 a month thing, I want to be selling them up $5,000 thing. Even if it means we get that money up front as opposed to you know, spread out over potentially, you know, 12 months or something like that. So, Oh that was a good kind of yard stick for folks to use about like when should sales kind of start entering into your you're, you know, promotional aspect and if they're getting stale then you probably need fresher leads I think. Yeah.
Speaker 1 23:10 Sorry, I'm just, I can't help it, you know the dad ponds just flow naturally after, so it's great being a father that's, that's all I can think about. As soon as one of my kids says something, I'm just like jumping on it with a bad pun just so I can get the eye rolls. I can even hear my daughters give eye rolls from the other room when I am doing the pawn and I can't visually see them at this point. That's how good I've gotten at this point. Here you go. There you go. How did you end up sourcing Chris here? Can you talk about, you know, how did you find the right guy? What were the questions that you asked that right. I assume Chris
Speaker 2 23:46 as a he, right?
Speaker 1 23:47 Yup. Yeah.
Speaker 2 23:48 So, um, it know, how, how did you figure out that Chris was a right fit for this position and what kind of questions were you asking in the interview to make sure that you've got somebody that fit this role?
Speaker 1 24:01 Yeah, so, uh, I got, lucky is the answer, but I'm okay and nobody wants to hear that. Come on get no, but, but, but no, I mean I got to live whatever I, you know, I, I'm pretty intentional about things. I got a little lucky and finding the right person. But since then, I've read a really good book called the who method. Um, and we'll include a link for it in the show notes, but it's just a really good framework for how to, how to kind of source, filter and hire and, and sell a candidate on your role in your business. So the who method is really good there. So, so I found Chris, like tactically, uh, I put a job posting out on a, we work remotely and on dynamite jobs and he came to your dynamite jobs. So the dynamite jobs.co through the folks that run down to my circle, Dan and Ian, um, and Chris was the owner, part owner of a digital marketing agency in California and for a couple of like personal reasons had just like a fuck it omit one day and was like, you know, I'm selling out to my partner, we're going to go travel the world with his like four year old daughter.
Speaker 1 25:03 And um, so he did that for awhile and then after like a year, it's like, well, you know, I need to do something worthwhile with my life now. Um, and wanted to just have, you know, what is now like a <inaudible> part time, like two thirds time, you know, role role in a company. He'll be going to full time after he gets back. He's in Southeast Asia for like six months now. Um, with Corona virus. He doesn't have Corona virus, but he's in Asia with the Corona virus. But when he gets back to the States in April, he'll be going full time with us. Yeah. So, so he's like a former business owner, did a lot of sales selling a lot of basically the same kinds of things that we do, you know, consultative packages and ongoing services for people. They did a lot of like website and digital marketing work.
Speaker 1 25:45 Yeah. And I think the reason that I thought he was the right person, one, he was a business owner, so like he gets the whole picture, which is, which is really great. It's really good. Um, at first it was, it was more intimidating to me than good, you know, because like, I mean, he ran like a seven figure agency and podcast motor is not a seven figure business. And so for him to come in and say, you know, I did this, we had 25 full time employees, it was really intimidating for me and I handled it poorly. Um, because I got like defensive to say like, you know, Hey, this is my fucking business. Don't tell me how to do this. And I didn't say it to myself. I said, you know, I don't want to go up market. I don't want to create these packages that, that you want to sell.
Speaker 1 26:27 I want to just kind of sit in my box. And so I got over that and he was really patient with me getting over that to the point where now we are really going up market and it's working really well and, and that's been really cool. So that's kinda who he and where he came from. But I think that the lesson that I pulled away, cause I interviewed a bunch of really terrible salespeople is, is kind of like the gestalt thing. You know, like if you, if you haven't done this before you're probably not gonna be able to do it this time. You know? So like hiring a salesperson that's sold digital services is like the biggest no brainer cause the transfer of, of knowledge and workflow and how you sell this stuff is <inaudible> really slick. So that was really nice.
Speaker 2 27:13 So all right, let me, let me unpack your statement from just a minute ago here. When you said I, I interviewed a bunch of really bad ones. Like what were some indicators that just told you right off the bat, this is not going to fucking <inaudible>.
Speaker 1 27:25 Yeah, I think the biggest thing for me when I interview somebody is I ask like one of the first things I ask is do they have any questions for me? And if you'll say no. Yup. I say I say at first because the worst thing and like the who method book to kind of reinforce this, I didn't know this, but like the worst thing you can do is like describe the job and the perfect candidate to, to somebody you're interviewing because then they're just going to pair it. It right back to you say, Oh, I'm, you know, independent research driven and, and working remotely and all this kind of shit before. But, but like to just open it up and say, you know, you obviously read the job application, I saw your resume and your cover letter. What questions do you have for me? And if they say no, I don't really have any questions at all, it's pretty clear. Then they don't care. And therap they're a bad candidate, right? So they're like automatically out right then.
Speaker 2 28:13 Wow. Okay. That's awesome. That's a great, that's a great filter right off the bat. Yeah. And also it demonstrates a lack of intellectual curiosity and an ability to to take the lead on things, right?
Speaker 1 28:26 Yeah, yeah, yeah, yeah, yeah. I mean, I, I think again, like reading this book and I've, we are in the process of like hire hiring somebody else right now. I've implemented some of the original like screening questions that they advocate. Um, and so I probably wouldn't in my next interview just ask that question right out, like first question, but, but it definitely would come later on. I think the biggest question I ask in interviews when it's my turn to ask questions is like, what did you do in your previous role? And have them explain it, you know, how did you, how did you like it? Like, what did you do good and what didn't you like? And then why did you leave and that like the first two or whatever first, you know, what did you do, what did you do well and what did you do badly?
Speaker 1 29:07 Are are pretty typical interview questions. And the last one is like, why did you leave? And the thing here is like where you pulled out, like were you promoted into another role or did your competitor buy you out? Or like in Chris's case, his like brother-in-law and his dad died in the same week. I think as you're just like, fuck it, I only live once I'm out of here. And so that's cool. Like that's a really legit reason. And I associate with that, you know, was leaving the U S and living in France and all this kind of life choice stuff. But, but so there's polling events like you get promoted or your competitor buys you out or whatever. That's great. Getting pushed out of a role where <inaudible> suck and you were fired or you were demoted or your job was eliminated or whatever is not a good reasonably the job. It's not the worst recently of a job, but, but that's like an indicator I think.
Speaker 2 30:00 Yeah. I mean you can kind of tell high quality folks from lower middle quality folks just based on, you know, are they hanging on until the bitter end because they don't have a lot of options or are they moving on because they found something better or they're moving on because they were good and they got promoted or, yeah, I mean stuff like that. But somebody is like, well, I've been in this job for 15 years and then they laid me off.
Speaker 1 30:24 Right? Yeah. That's not the kind of person you want.
Speaker 2 30:26 That's not, that's not somebody I want to hire. I'm not saying they're a bad employee, but I don't think it's a good fit for me and the kind of person, person and personality I would be looking for to work for me in general regardless of the role. So,
Speaker 1 30:38 yeah. Yeah. Yeah. So I mean that's kinda who he is and you know, kind of how I found them. How a bit about how we interview and stuff. I talked with Jake Jorgen in our last episode about how we onboarded a little bit, so I won't go over that again for folks to listen to the last episode. Um, but the one thing I, uh, other thing I want to talk about is like commission structure. And Jake and I touched on this a little bit, but I think it's worth like expounding on a little bit. It's like, I think how you pay your salespeople, we'll dictate a little bit the kind of person you get and, but also, um, the, the kind of work they do, you know, and so like Jake was talking about, he doesn't pay his, his sales reps commission at all. They're basically just like consultants and they do like a profit sharing thing at the end. And so that's like way on the, I'll say, conservative side of sales. And that's actually what I thought I would get at the beginning was uh, someone kind of like me honestly, who's not a, not an aggressive sales person, not somebody who's going to go and like push the envelope. <inaudible> and that person would, would take inbound leads, do the calls, honestly, probably be a little more consultative and the implementation level, uh, what's the, uh, the Wolf of wall street kind of guy. Right? Like wants to just
Speaker 2 31:52 rule the world, do a lot of Coke and hang out with really bad people. Yeah, that's, yeah.
Speaker 1 31:57 <inaudible> spectrum. Right? Like you, you, you, you can be all anywhere along the spectrum. And Chris and how, uh, we compensate him are further to the, you know, Wolf of wall street side of the spectrum where I reward him pretty heavily upfront for first time sales, not recurring cause that's a mess. Not like with some kind of retainer thing where like you get and you know whatever half of your commission now and half of the person stays for three months. But I only did that because I had the confidence in him because he owned a business before. So I think if he had been just a
Speaker 2 32:39 salesperson in his free to his life and didn't have the
Speaker 2 32:43 compassion kind of for like the shit you have to deal with with bad customers down the line, I probably wouldn't have done that. I would've been, you know, more conservative and more towards what Jake was talking about where like I just want you to deal with inbound leads and close those and everyone will be happy. But you know, Chris was brought in to really drive revenue, not just kind of like take what he's given. Yeah. Yeah. So there were several discussions ma. Yeah. Before, during and even after big snow about compensating salespeople. This is, this is something that is a big topic amongst the folks that were there and there was a whole lot of debate about, you know, do we go all commission, do we go partial commission? How much of a base salary do we offer? There was even somebody there that actually does a sales position that is all salaried that their sales processes so well documented at this point that basically they don't need to offer commission.
Speaker 2 33:40 They just need to have somebody walk the, the lead through the steps and they're so likely to convert that. There's no motivation for them to offer commissions on that. Yeah. And that's the other part that's there is, is we had no sales process before. Right. Right. And, and so for us, Chris deserves to be compensated for this work because he's developed sales process. He's our first ever sales person and he'll probably be a sales manager at some point, you know, and, and so I think that, yeah, that's, that's totally true is if you have an established sales process and you have data around like, okay, we get 20 leads in a week, 10% of them closed, then you know how many salespeople you need to hire in, which you can pay them and profit margins and all that kind of stuff. We had no idea about any of that stuff.
Speaker 2 34:23 So, right. Right. At, at scale. Right. Because he's doing 10 times the number of demo calls than I did before, just because he, he wants to and I didn't. So, yeah. That's awesome. The other, the other concern that a lot of people have <inaudible> in the big snow group was around churn. And there was this discussion and this actually happened to one of the guys that had the business and without divulging, you know, confidential details that basically when something like this that they hired a salesperson and then made them commission-based, it was just entirely commission-based. So what they ended up doing was they went out there and they just pounded the drum really hard and they got all these leads in the pipeline and they converted them and they got their commissions. But then between 60 and 90 days they started churning the fuck out. And this is after they had to go through a really heavy onboarding thing.
Speaker 2 35:16 And there was a lot of costs associated with that. I'm front. So they basically were losing money on these people, but the salesperson got, they got their full commission for it. And so this spurned a whole discussion about, well, what do you do about churn? And you know, what should, what are you really incenting here? Because basically when this guy was paying this person to the job, they did exactly the job that they were incented to do, which was to bring people in and convert into paid, but they didn't move them through the pipeline and continue to keep them successful for a certain period of time. Cause if he had gotten them through 90 days, their likelihood of staying for a lot longer is very high.
Speaker 1 35:56 Yeah. I think this is a, this is like an alignment of priorities problem. Uh, I think that I have one, they'll get, there can be the wrong person, right. For the job. And that's possible. But I think more often there's just an education problem where you as the, you know, the founder of the sales manager say this is not a good customer, don't bring more people in like this. And, and if the, if the sales person's reasonable, they'll say, okay, cool. I'll just go find more of whatever a good customer looks like. And a sales person has to know what a good customer looks like and they have to understand that the rest of the company has to deal with are these good or bad customers forever. And I think you can, you can fuck with their compensation schedule and that's one way to do it.
Speaker 1 36:40 But that is the quickest way to piss anyone off is to make how much money they make convoluted and seeming like you're trying to screw him. And so I would, I would go a long way to do everything before that. And that would be like the last resort is like, okay, yeah, you're only going to get paid 90 days after somebody signs up. That sounds like you're screwing me. And I know there's a lot between what we do in there, but um, I think that if you're just starting out like the <inaudible> and this, like Steli says, this is like the simplest sales compensation schedule. <inaudible> is the best one. All things being equal. And that's kind of we're talking about is this being equal or not, is like can you instill in your sales rep what a good customer looks like and what the best thing for the businesses with a simple compensation schedule. And if the answer's yes and then you should do that, you know?
Speaker 2 37:27 Yeah. And that's ultimately where the discussion led to was the, you know, it was the, the tradeoff between having a compensation schedule that made sure it didn't insent the wrong thing and having, you know, something that's really simple, but at the same time that, you know, you can go with something really simple, but you have to find a salesperson that's aligned with your thinking, with the customer. And otherwise they're going to just, you know, get people in to get that commission. And if they're that kind of a person thinking about it, you almost want somebody that's in a, a customer success role. Like you don't want them to just tournament Burnham as fast as they can through the lead list. And as long as they got him in, they don't care. They need to care after they're in or they need to make sure that somebody is going to care after they're in or that you're qualifying them enough upfront to know that they're going to be the right fit customer.
Speaker 2 38:20 So in the case of the person that I'm talking about here, they ended up getting rid of that salesperson because it just, the value alignment was off. And by getting rid of them, that was actually the best possible situation. And then they changed up their process to something different and things got better as a result because you wanted somebody that was more in alignment with their idea of we got to get them to 90 days and we need to make them successful. So you have to do all of these things in addition to selling them on the service. So yeah, it was, it was a very, it's about, it's about value alignment. That's the bottom line. You gotta have a salesperson that aligns with your values, and then the compensation kind of naturally flows from that. If you have somebody that is doing what you expect and want out of your business, attracting the right kind of customer and making sure that they are going to stick around, then a simple compensation plan works great. But yeah, if you're mismatched on on values, boy you're fucked.
Speaker 1 39:17 So yeah, that's a, that's kind of the story for us for, for sales and compensation. Uh, we'd love to continue the discussion. If anybody has any questions or comments, shoot us a message podcast@roguestartups.com or leave a comment in the post for this episode. And as always, our ask is if you are enjoying the podcast, please share it with someone who you think would enjoy it as well. Not until next week.
Speaker 0 39:39 Thanks for listening to another episode of rogue startups. If you haven't already, head over to iTunes and leave a rating and review for the show for show notes from each episode and a few extra resources to help you along your journey. Head over to rogue startups.com to learn more. <inaudible>.
