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Elevating Startup Sales: A Conversation with Aaron McReynolds and Ryan Harris, Co-Founders of Alysio
9 Plays1 year ago
Startup sales—the phrase alone is enough to stress a founder out. We're bringing in two experts who will help unlock the secret to sales success. Join us in today's conversation with Aaron McReynolds and Ryan Harris, co-founders of Alysio, and investor Kat Kennedy of Kickstart (a VC firm for startups in Utah, Colorado, and the Mountain West) as we bring you both sides of a perfect pitch. In this episode, we'll talk about:
How Alysio nailed down big customers early on in their startup journey and their advice to founders struggling with customer acquisition
The components that make a good sales organization
Common blind spots that trip up sales teams
Why Kat is so excited about Alysio's financial model and how entrepreneurs can improve their company's model
Recommended
Transcript
Introduction to Perfect Pitch Podcast
00:00:00
Speaker
Startup sales.
00:00:01
Speaker
The phrase alone is enough to stress a founder out.
00:00:04
Speaker
We're bringing in two experts who will help unlock the secret to sales success.
00:00:09
Speaker
Join us in today's conversation with Aaron McReynolds and Ryan Harris, co-founders of Alessio and investor Kat Kennedy as we bring you both sides of A Perfect Pitch.
00:00:29
Speaker
Perfect Pitch is a podcast from Kickstarter that reveals the minds of both investors and entrepreneurs throughout a startup's journey.
00:00:38
Speaker
I'm your host, Karen Zelnick, and I'm excited to introduce you to today's guests.
Aaron McReynolds: Sales Journey & Passion
00:00:43
Speaker
Aaron, we're going to start with you.
00:00:44
Speaker
So you have nearly a decade of experience in sales and sales management across various markets, you know, enterprise, corporate, international, you name it.
00:00:52
Speaker
You have successfully sold and managed accounts for some of the leading software companies in the industry, such as Lacework, Okta, and Qualtrics.
00:00:59
Speaker
Outside of family and work, soccer, or as you would say, football, is your biggest passion.
00:01:03
Speaker
You even ran a club with 25 members.
00:01:05
Speaker
Who's your team?
00:01:07
Speaker
Yeah, Manchester United since I was four years old.
00:01:10
Speaker
Amazing.
00:01:11
Speaker
Amazing.
00:01:11
Speaker
Is it hard to watch the game sometimes, though, with how they're doing?
00:01:14
Speaker
Okay.
00:01:16
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Yesterday was tough, but no, I've been supporting them since I was four years old.
00:01:20
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I was born in Leicester in England, so it's a bit controversial, but the rest of the family's from up north, so I get a pass.
00:01:26
Speaker
Yeah, that's amazing.
00:01:27
Speaker
And what else would you like listeners to know about you?
00:01:29
Speaker
Yeah, I think to that point, I was born in the UK, lived there forever.
00:01:33
Speaker
three different times, lived in Australia, a couple of times, spent a couple of years in New Zealand as well.
00:01:40
Speaker
That's so fun.
00:01:40
Speaker
Great.
Ryan Harris: From Finance to Alessio
00:01:41
Speaker
And Ryan, let's learn a little bit about you.
00:01:43
Speaker
You earned your bachelor's in finance from the University of Utah and your MBA from BYU.
00:01:48
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You started your career as an analyst at Goldman before working as the head of asset management at Table Rock Capital.
00:01:53
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And today you're the co-founder and COO of Alessio.
00:01:56
Speaker
You're a Utah jazz fan, but you grew up idolizing Michael Jordan.
00:01:59
Speaker
And I've heard a rumor that you've met him.
00:02:01
Speaker
Is that true?
00:02:02
Speaker
That's true.
00:02:03
Speaker
Yeah.
00:02:03
Speaker
So I hopefully my fellow jazz fans forgive me, but I love Michael Jordan.
00:02:08
Speaker
I set a goal very early on to eventually meet him.
00:02:11
Speaker
And luckily enough, I was valeting at a golf course here in Utah where he was a member.
00:02:15
Speaker
He pulled up one day.
00:02:16
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I was the only valet available.
00:02:18
Speaker
So I luckily got to meet him.
00:02:19
Speaker
We said literally probably two words to each other, but I checked that off my list and I was able to park his car.
00:02:24
Speaker
So cool.
00:02:25
Speaker
Was it fun driving the car?
00:02:26
Speaker
It was great.
00:02:27
Speaker
What kind of car was it?
00:02:28
Speaker
So we always came with two cars.
00:02:30
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On this day, he pulled up with two Bentleys.
00:02:32
Speaker
So it was a good experience.
00:02:33
Speaker
As one does.
00:02:35
Speaker
That's so cool.
00:02:36
Speaker
Is there anything else you'd like listeners to know about you?
00:02:39
Speaker
I, you know, grateful to be here.
00:02:41
Speaker
I love content.
00:02:42
Speaker
I've become a bookworm.
00:02:43
Speaker
I love listening to podcasts.
00:02:45
Speaker
So grateful for this opportunity.
00:02:47
Speaker
Love listening to your guys' podcasts.
00:02:48
Speaker
We're grateful we can contribute.
00:02:50
Speaker
Yeah, and we're grateful that you're here.
00:02:51
Speaker
So thank you very much.
00:02:52
Speaker
And Kat, of course, it's great to have you back on the show.
00:02:55
Speaker
We'll have a link to your bio in our show notes.
Kat Kennedy: Music Preferences & Personal Insights
00:02:57
Speaker
What if some of the audience doesn't know about you, Kat?
00:03:00
Speaker
I'm running out of fun facts, but we are in the season of Spotify Wrapped.
00:03:06
Speaker
And an embarrassing fun fact about me is that two years ago, I was the number one listener of Tyga.
00:03:14
Speaker
And if you don't know who Tyga is, I highly recommend you search up his music.
00:03:17
Speaker
It's great.
00:03:18
Speaker
The number one listener in the world.
00:03:20
Speaker
In the world.
00:03:21
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So my husband got me a lot of swag, a lot of Tyga swag for Christmas.
00:03:24
Speaker
And now it's a running joke that...
00:03:27
Speaker
Yeah, I'm no longer the number one fan.
00:03:29
Speaker
I'm a big fan still.
00:03:30
Speaker
I am an Apple Music person, although I prefer Spotify sometimes.
00:03:34
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But right now, my number one artist is Elmo because of my two-year-old.
00:03:38
Speaker
So it's... Yeah, they really... There needs to be like a kid's profile for your listening so it doesn't mess up your sort of... Anyway.
00:03:47
Speaker
If Apple's listening, I would request that.
Origins of Alessio: Motivations and Innovations
00:03:49
Speaker
So let's dive into the story of Alessio.
00:03:52
Speaker
So Aaron, you spent nearly a decade in sales before founding Alessio.
00:03:56
Speaker
I'd love to know what was the problem you were trying to solve?
00:03:58
Speaker
Why did you leave such a successful career to then jump into being an entrepreneur?
00:04:03
Speaker
The origin story of why we built it goes back to my first sales job.
00:04:08
Speaker
We were a massive sales organization, about 800 sellers at the time.
00:04:13
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We had every single sales tool under the sun, Salesforce, Clary, going outreach, you name it, we had it.
00:04:19
Speaker
And still we felt like there was a gap.
00:04:21
Speaker
And for us, that gap was answering a very simple question.
00:04:24
Speaker
How do you go and know that your reps have had a good day in sales?
00:04:27
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Not a busy day, but have done the right things, focused on productivity, building for the future.
00:04:32
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And so we did what you do when a product doesn't exist.
00:04:36
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To track that, we created a spreadsheet.
00:04:39
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And so we use that spreadsheet to track essentially top of funnel productivity.
00:04:44
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We did it on a points based system.
00:04:45
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Every day you come in, you'll get your eight points.
00:04:48
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And that was just an easy way for reps to let managers know what they've been doing to hopefully get trained on the right things.
00:04:55
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And then for the managers to really understand their people.
00:04:58
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And so I used it for about two years, started seeing a pretty direct correlation between the teams and the reps that had adopted the spreadsheet.
00:05:06
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Those are the ones that were hitting quota.
00:05:08
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Those were the reps that were going to President's Club.
00:05:10
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And then I left and I joined another sales organization and we went fully remote.
00:05:16
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It's right when COVID hit.
00:05:18
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And so kind of lost the ability to walk down a row and see the reps that had a headset on and the reps that were in a room doing the demos.
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And so as a new rep, I started to panic essentially and said, I don't know anyone here.
00:05:30
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My manager doesn't know me well.
00:05:32
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How do I let them know that I'm doing the things I should be doing every day in this fully remote work environment?
00:05:38
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And so I started using the spreadsheet again.
00:05:40
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I asked my SDRs if they would use it so I knew what they were doing and I could train them the right way.
00:05:45
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I was working remote in my garage in Orange County and called Ryan essentially with the concept of saying, look,
00:05:52
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Been at two pretty phenomenal sales organizations.
00:05:54
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This is a problem.
00:05:56
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Should we go and see if anyone else is struggling with the same pain?
00:05:59
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And became very apparent very quickly that we weren't the only two sales organizations tracking this in a spreadsheet.
Early Traction and Collaborations for Alessio
00:06:07
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And Ryan, what was your response?
00:06:08
Speaker
Like what excited you about Alessio?
00:06:11
Speaker
There were two things that excited me.
00:06:12
Speaker
The first was, it was a chance to work with Aaron.
00:06:15
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So Aaron and I worked together back at Goldman right out of undergrad.
00:06:19
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Somehow we were responsible for putting together proposals for the company.
00:06:23
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On behalf of Goldman Sachs Asset Management, there was millions of dollars on the line.
00:06:27
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And somehow we were tasked with putting together those proposals and somehow we figured it out.
00:06:33
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So from that time on, I knew that if I were to go to do something, I would want it to be with
00:06:37
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Aaron because he and I work very well together and we were able to figure stuff out and get stuff done.
00:06:43
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And then the second reason is that it resonated.
00:06:46
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So after I left Goldman, I wanted to help grow a startup.
00:06:49
Speaker
And so I left and joined Curtis Anderson.
00:06:51
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He was building a business intelligence platform at the time.
00:06:55
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I was responsible for building out their go-to-market efforts and team.
00:06:59
Speaker
And so I had some exposure to the sales space
00:07:02
Speaker
So when Aaron called me with this idea, it resonated, given my exposure to kind of the lack of tools or kind of the lack of gamification or effective productivity tracking that was in the market.
00:07:14
Speaker
It takes some startups years to nail down big customers.
00:07:17
Speaker
How did you do it so early on?
00:07:18
Speaker
Yeah, I think we got fortunate in the early days.
00:07:21
Speaker
Like I mentioned, we started making phone calls to different sales teams and leaders, figuring out who was running on a spreadsheet.
00:07:28
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And we just saw that as the early wins.
00:07:30
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We built this MVP version of what we thought was going to be the right solution.
00:07:35
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One of the first adopters of the platform was a previous colleague.
00:07:39
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He works at MongoDB.
00:07:41
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And they were running the same process in a spreadsheet.
00:07:44
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And so I said, hey, if we go and build it, will you guys use it?
00:07:47
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I said yes.
00:07:48
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And so we did.
00:07:48
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And we were able to get them on early, got a ton of phenomenal feedback.
00:07:52
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In fact, they had a feature request right at the beginning.
00:07:54
Speaker
And we were able to go out and add that to the platform in about 48 hours.
00:07:58
Speaker
And it was kind of at that point where we knew, okay, if this is still a problem at a company like MongoDB,
00:08:04
Speaker
There is a lot of other sales teams that don't perform as well as they do that don't run metrics the same way that they do.
00:08:10
Speaker
And so we saw the opportunity there and we got very fortunate.
00:08:14
Speaker
And I think for us, when I say fortunate, I don't think we can understate that kind of from the early days, we could go and say, we're running this with three enterprise sales teams at MongoDB.
00:08:23
Speaker
And so I think just from an early stage to be able to carry a logo like that has led to a lot of success with a number of other sales organizations.
00:08:31
Speaker
I'd say what was encouraging is that we had a connection to the sales org there.
00:08:35
Speaker
But when we presented our contact with the idea, he said, hey, I want you to go and pitch our regional directors.
00:08:41
Speaker
If they like it, great.
00:08:43
Speaker
And so it wasn't just because we had a connection.
00:08:45
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We presented it to the regional directors.
00:08:47
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They all loved it.
00:08:48
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At that point, we got really excited because we felt like we had a product that could go and be effective for large sales orgs.
Sales Strategies and Customer Focus
00:08:55
Speaker
And what advice would you give to founders who are struggling with customer acquisition?
00:09:00
Speaker
Yeah, I think for us, we've built the platform in such a flexible manner that we could go and sell it to any sales team.
00:09:08
Speaker
But early on, we knew that between the two of us, B2B SaaS is what we knew best.
00:09:14
Speaker
And so kind of our early product decisions were based around that.
00:09:17
Speaker
We knew the pains that we're trying to solve were within B2B SaaS.
00:09:20
Speaker
We believe that they're outside of that as well.
00:09:23
Speaker
But by nailing it down early and saying, we're just going to go and focus on these organizations.
00:09:27
Speaker
Who do we know?
00:09:28
Speaker
Who can we reach out to?
00:09:29
Speaker
We were able to get quite a number of early beta customers into the platform, collecting that feedback and really validating the concept early on.
00:09:37
Speaker
And so I would say that if you're starting to sell a product, know who you want to sell it to as early as possible.
00:09:44
Speaker
Be really dialed in and focused on that area and those people and really define as quickly as you can.
00:09:51
Speaker
Who is it going to resonate the best?
00:09:52
Speaker
We built the platform for reps, but we knew that reps weren't going to go in and purchase the platform straight away.
00:09:58
Speaker
So it had to resonate with the managers as well.
00:10:00
Speaker
Had to resonate with the directors of sales, had to resonate with CROs.
00:10:04
Speaker
And so we focused on those two pieces in the early days.
00:10:07
Speaker
And we continue to do that, right?
00:10:09
Speaker
That's still our core focus, making sure we're talking to the right person, that the message we have is tailored for them.
00:10:15
Speaker
And again, I think we built the platform for top performers, right?
00:10:18
Speaker
They want to know what they're doing well.
00:10:20
Speaker
They want to report that they're doing well.
00:10:23
Speaker
They want the managers to know what they're doing.
00:10:24
Speaker
And so by having these individuals come into the platform now as well, that has opened up essentially logos that we can go in and say, hey, you have reps already using this.
00:10:34
Speaker
It's free for an individual to come in and use it.
00:10:36
Speaker
And then taking that narrative and going to their directors.
00:10:39
Speaker
And we had a conversation.
00:10:40
Speaker
It was probably four or five months ago, had an individual sign up to single user.
00:10:44
Speaker
Didn't really hear too much from them in the time being.
00:10:47
Speaker
And then I got an email introducing their manager.
00:10:50
Speaker
And so yesterday we met with the manager and it resonated and now we're moving forward.
00:10:54
Speaker
So I think being hyper focused on who you're selling to, making sure the message is going to resonate and then sticking with that in the early days.
00:11:03
Speaker
And I'd say get creative with your outreach.
00:11:06
Speaker
Aaron and I were at Saster a couple of months ago and they had a sales leader from Gong speak.
00:11:12
Speaker
And he said that, you know, they are inundated emails with calls.
00:11:17
Speaker
And for him to actually look at a product, it took creativity.
00:11:21
Speaker
So someone actually sent him a coconut and it said, you'd be nuts not to take a demo with me.
00:11:28
Speaker
And he said he had to take a demo at that point.
00:11:30
Speaker
And so I think it's very important to get creative.
00:11:33
Speaker
I know a lot of people are like sending video messages through LinkedIn, making it extra personalized.
00:11:39
Speaker
And so I think if you can think outside of the box on how to reach your target audience, it'll pay off.
00:11:45
Speaker
Kat, what was appealing about Alessio?
00:11:48
Speaker
And then I'd love to know what advice you have from your early days at DeGreed.
00:11:55
Speaker
Why did I insist that we invest in Alessio?
00:11:58
Speaker
You really have heard it as they have been talking about their customers.
00:12:03
Speaker
Both of these two and the team that they've hired, there's a deep understanding of their customer and the problems that they need to address in order to help that customer and user to be successful.
00:12:15
Speaker
So that deep understanding and empathy and the knowledge that they have to go and address those things was so evident from my very first meeting with them.
00:12:26
Speaker
And to this day, you hear it as they're answering your questions.
00:12:30
Speaker
Very little of what they have answered is all about Alessio.
00:12:34
Speaker
It's about their customers.
00:12:35
Speaker
It's about their problems and the passion that they have for addressing that.
00:12:40
Speaker
And in so addressing, they're going to make those customers and users successful and therefore Alessio will be successful.
00:12:46
Speaker
That is magic.
00:12:49
Speaker
One of the questions that I have in my rubric evaluating deals, the part that focuses on the founding team, it's why are these people the ones to solve this problem?
00:13:00
Speaker
And it's so clear that these two and the team that they've hired are the ones to be solving this problem because of their lived experience and because of how they listen to their users and to eventually their buyers.
00:13:14
Speaker
That really echoes some of the things that we learned earlier at DeGreed.
00:13:18
Speaker
It was getting on the phone with who would eventually be our buyer and just talking through what's your day-to-day, what's your experience, what's working, what's not.
00:13:27
Speaker
That seems so simple.
00:13:29
Speaker
It is so hard to do and to do it well.
00:13:31
Speaker
Because often we're blinded by our own opinions and thesis as to what the product needs to be, that we're not actually listening.
00:13:39
Speaker
And that's not at all what I see in Aaron, in Ryan, or in those that they've hired to build out the product.
00:13:46
Speaker
They're just listening constantly.
00:13:48
Speaker
They're always on the phone with customers.
00:13:50
Speaker
They're always watching how they utilize the platform.
00:13:53
Speaker
And that's
00:13:54
Speaker
how great products and great companies
Evolving Nature of Sales and Productivity
00:13:57
Speaker
are made.
00:13:57
Speaker
And it goes all the way back to why did Aaron approach this?
00:14:02
Speaker
He was watching what was being done in a spreadsheet and thinking about the ways that could be done better to create not just a great product, but a great company and platform so that more sales reps can close more deals.
00:14:14
Speaker
Because really, isn't that what we're all after?
00:14:17
Speaker
Yes.
00:14:18
Speaker
Yeah.
00:14:19
Speaker
That's what I wake up caring about.
00:14:21
Speaker
That's what I think about.
00:14:22
Speaker
Show me the money, please.
00:14:26
Speaker
Aaron and Ryan, you really have created something magical.
00:14:29
Speaker
Sorry, I caught a bubble right there.
00:14:30
Speaker
And as Kat said... It made you emotional.
00:14:32
Speaker
You did.
00:14:32
Speaker
I had tissues, but I had to use them when I... You talked about revenue and Kat started crying.
00:14:36
Speaker
I do.
00:14:36
Speaker
And as Kat said, it's very clear that you two and your team, you're the ones to solve this problem.
00:14:42
Speaker
And I want to showcase a little bit of that magical expertise.
00:14:45
Speaker
We're not going to give it all away.
00:14:46
Speaker
But apart from signing on as customers of Alessio, could you give a little insights to listeners on what makes for a good sales organization?
00:14:53
Speaker
Yeah.
00:14:54
Speaker
I think it's going to depend on what you're selling.
00:14:57
Speaker
We'll talk to B2B SaaS for now because that's where we sit.
00:15:01
Speaker
In the last two years, sales has completely changed.
00:15:06
Speaker
We went from the ability to just make cold calls and send emails and you would hit quota.
00:15:11
Speaker
Now that doesn't work perfectly, right?
00:15:13
Speaker
You need to be doing so much else outside of that.
00:15:17
Speaker
I've always been a pretty relationship-focused seller, and then COVID hit and I had to pivot, right?
00:15:22
Speaker
You can't build a very good relationship over Zoom, but you have to figure out ways to do it.
00:15:27
Speaker
And I think that's true today.
00:15:29
Speaker
We know about the layoffs that have happened in tech in the last few years.
00:15:33
Speaker
These sales organizations are trying to do more with less.
00:15:37
Speaker
We see this future where only top performers are going to be the ones selling.
00:15:41
Speaker
The ability to just be half in and half out in a sales job doesn't exist anymore.
00:15:47
Speaker
I've never seen reps work as hard as they have in the last year.
00:15:51
Speaker
2023, probably the hardest selling year in the last decade.
00:15:55
Speaker
And the ones that you see that are still hitting quota, which is so hard to do right now, are the ones that are running their book like a CEO, like hyper-focused on their book.
00:16:05
Speaker
They know their customers inside out and they work hard every day.
00:16:09
Speaker
We look at these top teams like MongoDB, they could probably sit back on their laurels and say, we have a world-class product.
00:16:15
Speaker
We've been one of the best sales teams for the last 10 years, but they don't.
00:16:19
Speaker
They're digging in, they're doubling down, they're focused on winning every single day.
00:16:23
Speaker
And I think that maniacal focus on winning the day as a sales rep is going to become even more apparent because I don't think it's going to get any easier.
00:16:31
Speaker
I don't think 2024 is looking really peachy, maybe wrong, but I think that kind of level of grit and effort that was required for 2023 is going to carry over.
00:16:41
Speaker
I'd say it boils down to skill and will.
00:16:44
Speaker
Up to this point or before 2023, individuals or sales teams maybe could have gotten by with just skill or just will.
00:16:53
Speaker
But I think in today's world, kind of to Aaron's point, you have to have both skill and will.
00:16:58
Speaker
Obviously, not everyone is going to have the skill right off the bat, but will is something that you can control.
00:17:04
Speaker
So if you put in the will, our platform highlights those individuals who may not necessarily have the skill, but they can be trained so that they can get on par with everyone else and be a top will and a top skill individual.
00:17:15
Speaker
Kat, what would you add?
00:17:18
Speaker
I work with an executive coach, which I've mentioned a few times to anyone that will listen to me.
00:17:22
Speaker
And one of the frameworks he repeatedly reminds me of is that just showing up and doing the work is how excellence often comes to bear.
00:17:34
Speaker
And a lot of people have the will.
00:17:36
Speaker
What they don't have is the recipe that will turn that will into skill.
00:17:42
Speaker
Management in sales often is a great rep that got promoted but has no idea how to lead people.
00:17:49
Speaker
So how can we provide those reps at every stage of the funnel with the recipe that they need to apply in order to have a great day?
00:18:00
Speaker
And if you can give them that recipe, you are able to turn Will into skill because every rep can show up every day.
00:18:09
Speaker
They are hunters.
00:18:10
Speaker
They want to eat.
00:18:11
Speaker
They want to kill what they eat, right?
00:18:14
Speaker
So ensuring that you're keeping them engaged and empowered to actively be putting in the work and seeing return on it is so important.
00:18:22
Speaker
And again, another reason why I'm such a huge fan of what they built at Alessio.
00:18:27
Speaker
Are there blind spots that sales teams could struggle with?
00:18:31
Speaker
Absolutely.
00:18:32
Speaker
When we talk about data in sales organizations, we're inundated with tools, right?
00:18:39
Speaker
Like I mentioned, at my first sales company, we had so many tools and every single one of them seemed to tell a bit of a different story.
00:18:46
Speaker
And so when we looked at the landscape, all this data existed, but it wasn't telling the right story.
00:18:53
Speaker
And so then you have managers that are coaching individuals on the wrong data.
00:18:58
Speaker
And so historically, sales managers have just defaulted to everyone go out and make 60 cold calls a day.
00:19:04
Speaker
What if I'm not good at cold calls?
00:19:06
Speaker
Why am I spending an hour and a half, two hours of my day making cold calls?
00:19:09
Speaker
And that's not my forte.
00:19:11
Speaker
Should I be in front of customers?
00:19:12
Speaker
Should I be on site?
00:19:13
Speaker
Should I be doing my social selling?
00:19:15
Speaker
Should I be the one that's at events?
00:19:17
Speaker
You want to be able to focus on the individual and let the data tell the story about that individual.
00:19:22
Speaker
And so we have this vision for the way that the platform works, where we want to be able to import all these different data points and then go and tell the story about how to be as predictive as possible to go and hit revenue, which to Kat's point is the end goal.
00:19:37
Speaker
Another challenge that we kind of ran into is, I think the intuitive thing is to try and target a very large customer base.
00:19:46
Speaker
All of the data shows and a lot of industry leaders and sales leaders and founders say you need to get very specific on who you target.
00:19:54
Speaker
And so that would be, I think, a blind spot for some early stage sales teams.
00:19:59
Speaker
It's, again, the idea of let's go after B2B SaaS.
00:20:01
Speaker
And that's kind of what we said early on.
00:20:04
Speaker
But again, the data shows that you need to get very specific on who you target.
00:20:08
Speaker
So that's something that we're working on.
00:20:09
Speaker
We're coming up with specific segments within B2B SaaS.
00:20:12
Speaker
We're looking at a couple other segments.
00:20:14
Speaker
And I think by focusing on those specific segments first, and then expanding from there leads to more success.
Financial Models and Business Success
00:20:22
Speaker
So behind the scenes of a well-oiled machine is a robust financial model that Kat, you rave about.
00:20:27
Speaker
So tell us about it.
00:20:29
Speaker
My love language is when founders know their numbers.
00:20:32
Speaker
Oh, I love it so much.
00:20:34
Speaker
And I'm not just talking about in hindsight.
00:20:36
Speaker
A lot of people can tell me how much revenue they hit for the month and what their burn is.
00:20:41
Speaker
But in looking at a financial model that looks forward or pro forma,
00:20:48
Speaker
What I'm looking for is a good understanding of all of the different parts of the business.
00:20:53
Speaker
And we'll call those ingredients and how they interact with each other assumptions.
00:20:58
Speaker
And I'm always digging into those models to see if one, the founders understand the different ingredients, what that means for operations, what that means for how they can hire, what that means for the numbers that they need to hit.
00:21:11
Speaker
but also how those interact with each other.
00:21:15
Speaker
And I can see that.
00:21:17
Speaker
I can see that in a model.
00:21:19
Speaker
And when Ryan sent that over when we were in early diligence, I think I scream out loud like, oh, I love this model.
00:21:25
Speaker
It was just so evident to me that these two are not only well-versed in their customer, but they're well-versed in the operations of a business and how those different parts of the business can and should interact.
00:21:40
Speaker
so that they always have a good handle on their cash.
00:21:43
Speaker
Because that's really what happens.
00:21:45
Speaker
If you don't understand how these pieces work together, you can lose grasp of your cash situation and end up in a less than desirable state.
00:21:53
Speaker
In today's world, and I wish always, but really today, we need startups not just growing, but growing efficiently.
00:22:02
Speaker
To have that be more than just a dream or like some soundbite from your investors and board, you have to know what's going on in your model.
00:22:09
Speaker
Okay, we can tell how excited Kat is about this.
00:22:13
Speaker
Ryan, I would love to know, what advice do you have on making good assumptions in your model?
00:22:19
Speaker
The secret sauce, I think, for us is probably that I use a Lenovo.
00:22:23
Speaker
I get a lot of crap from Aaron here.
00:22:25
Speaker
I'm the only one on our team without a Mac.
00:22:28
Speaker
That's it.
00:22:28
Speaker
That's all you have to do.
00:22:30
Speaker
Just get a Lenovo.
00:22:31
Speaker
You'll be good.
00:22:31
Speaker
There are so many assumptions that go into a model.
00:22:35
Speaker
And so when we started
00:22:36
Speaker
To build it out, we wanted to make it very clear.
00:22:38
Speaker
We wanted the data to make sense.
00:22:39
Speaker
And so we have a couple overview tabs that kind of highlight the main points and show how all of the assumptions come together.
00:22:46
Speaker
Then we break out, we have a tab for revenue, we have a tab for most expenses.
00:22:51
Speaker
And we wanted to do that so that we could focus on each assumption and not get confused by having it all together.
00:22:58
Speaker
We tried to create a model that is as intuitive as possible.
00:23:02
Speaker
We look at it on a weekly basis.
00:23:04
Speaker
And I think
00:23:05
Speaker
A financial model can be such a powerful tool if it's used correctly.
00:23:09
Speaker
And we're still kind of working on this.
00:23:11
Speaker
But, you know, hypothetically, if you wanted to reach a million in ARR, instead of just guessing, you know, on how you can get there, a good financial model will help you make decisions and help you make the appropriate hires so that you can achieve your milestones.
00:23:27
Speaker
So in our new and improved model, we bake in more sales assumptions so that we know, okay, if an AE is going to bring 15 new customers per month, and we want to get to that million ARR milestone, we need to hire an AE at this point.
00:23:42
Speaker
And then we trigger in customer success managers as well once we reach a certain number of customers.
00:23:48
Speaker
So I think the financial model can be incredibly powerful if it's used correctly.
00:23:53
Speaker
When I first got into an executive position, my background's technology and product.
00:23:59
Speaker
I was very intimidated by the financial aspect of it.
00:24:03
Speaker
My CEO knew my long-term aspirations and he got me a mentor where we were focused on finance.
00:24:09
Speaker
That mentor was a partner at Carlyle.
00:24:12
Speaker
He now runs his own private equity group.
00:24:15
Speaker
And we spend a lot of time just helping me to get more savvy on the financial side.
00:24:19
Speaker
And I could summarize two years of weekly mentoring with that incredible man.
00:24:25
Speaker
Finance is a science of how do all these ingredients need to work together to drive an outcome, but it's also an art.
00:24:32
Speaker
And you see that art revealed in the word assumption.
00:24:35
Speaker
I assume that if we do X, Y will happen.
00:24:40
Speaker
And a lot of times I see people, especially those that are product or technology and their background before they started their own business, intimidated.
00:24:49
Speaker
Don't be because you already know and have an assumption or you wouldn't be doing this.
00:24:55
Speaker
And those things are so critical as you build out your model.
00:24:58
Speaker
So like, don't be scared.
00:24:59
Speaker
You can do this.
00:25:00
Speaker
We promise.
00:25:01
Speaker
Yeah, I think as well, we didn't just build the model for Cat.
00:25:04
Speaker
Ryan made 250k stretch from October of last year to May of this year.
00:25:11
Speaker
250k.
00:25:12
Speaker
We have a quote on the board from Mark Cuban.
00:25:14
Speaker
You want to share that one?
00:25:15
Speaker
Again, this is what I'm saying.
00:25:17
Speaker
He doesn't just talk the talk.
00:25:18
Speaker
Ryan walks the walk when it comes to this stuff.
00:25:21
Speaker
Yeah.
00:25:21
Speaker
The quote from Mark Cuban is, cash is your lifeblood.
00:25:24
Speaker
Don't spend it unless you absolutely have to.
00:25:27
Speaker
That's on our wall.
00:25:27
Speaker
Obviously, you need to spend to make money, but we're very cautious about what we spend our money on.
00:25:34
Speaker
And that balance between you need to grow and you need to do it efficiently.
00:25:38
Speaker
How do you do that?
00:25:41
Speaker
You know your numbers.
00:25:42
Speaker
You can be efficient and burn if you know how those things interact.
00:25:46
Speaker
And if you don't have a good awareness of those ingredients, the behavior that I see in founders is they're either way too aggressive and they have no good awareness of what's happening with their cash.
00:25:57
Speaker
They're just spending in order to grow or they're too conservative.
00:26:02
Speaker
They're so scared to spend.
00:26:05
Speaker
The magic happens and where the venture model is so powerful is when you know how the things interact and you can be efficient in your growth.
00:26:14
Speaker
And the way to do that is know your growth.
00:26:17
Speaker
And if you could see my face, you would just have seen me grinning.
00:26:20
Speaker
It's true.
00:26:21
Speaker
She has been articulating.
00:26:23
Speaker
Because there is a ton of science to it.
00:26:25
Speaker
The beautiful thing about the SaaS business model is there's a recipe that can be applied.
00:26:31
Speaker
You just need to know how that recipe interacts with your business.
00:26:37
Speaker
And it's interesting because I come from a finance background.
00:26:40
Speaker
I love the numbers, love spreadsheets.
00:26:42
Speaker
He's grinning too.
00:26:43
Speaker
Yeah.
00:26:43
Speaker
So you can see both of them.
00:26:46
Speaker
Yeah.
00:26:47
Speaker
But what's cool though is I would say Aaron is on par.
00:26:50
Speaker
Like Aaron comes from a sales background.
00:26:52
Speaker
I come from a finance background, but Aaron knows the numbers just as well as I do.
00:26:55
Speaker
He knows all the VC terms as well as I do.
00:26:58
Speaker
And I think that's required.
00:26:59
Speaker
Like the founders need to know every aspect of the business.
Leveraging Investor Support and Execution Strategies
00:27:03
Speaker
We have a woman on our team, Kristen, who I don't think has ever been on the podcast.
00:27:08
Speaker
But she has said it, and I believe her, that she knows what's going on in the business by how clean the model is.
00:27:16
Speaker
And she will always call six months before a problem really reveals itself in the boardroom because she's digging in on those numbers.
00:27:24
Speaker
So time and time again, this proves itself out.
00:27:28
Speaker
This isn't just a narrative that we're telling to pump up Alisio.
00:27:32
Speaker
Knowing how those numbers interact with each other is such a critical part of growing your business and will help you to anticipate where you're going to have constraints down the road.
00:27:45
Speaker
So for those entrepreneurs who might be intimidated by it, where can they go to learn a little bit more?
00:27:52
Speaker
Goldman.
00:27:52
Speaker
Goldman.
00:27:53
Speaker
Great.
00:27:54
Speaker
We're plugging Goldman on this podcast too.
00:27:55
Speaker
80 hours a week.
00:27:56
Speaker
80 hours a week.
00:27:57
Speaker
And easy 80 hours a week at Goldman.
00:28:01
Speaker
Leverage your investors.
00:28:03
Speaker
I think investors have seen a ton of models.
00:28:06
Speaker
They are all very experienced with building them.
00:28:09
Speaker
And so I would say leverage them as much as possible.
00:28:12
Speaker
If you don't have investors yet and you're working towards that, I would reach out to other co-founders.
00:28:17
Speaker
I think co-founders are very willing to help because they know what it's like.
00:28:22
Speaker
Leverage your network as much as possible.
00:28:24
Speaker
And there's resources online, you know, Saster University has so much.
00:28:29
Speaker
Dave Kellogg, who has a lot of content on Balderton Capital, also so much information for SaaS businesses.
00:28:38
Speaker
And dependent upon your model, the thought leader will change.
00:28:42
Speaker
But if you're a SaaS business, Saster is priceless.
00:28:45
Speaker
Dave Kellogg's information is priceless.
00:28:48
Speaker
There's also some really funny characters on Twitter that are all in ons, like only CFO.
00:28:53
Speaker
And that's all they talk about is all the different pieces of your model and the assumptions that drive that model, particularly what happens in a SaaS business to drive those forward.
00:29:05
Speaker
Great insights.
00:29:06
Speaker
Thank you.
00:29:06
Speaker
Aaron and Ryan, we like to end with the same question for all of our guests.
00:29:10
Speaker
And that is, what's an effective practice that you've implemented in your work or personal life that you think has had a great impact on your success?
00:29:18
Speaker
And Ryan, if you'd go first, then we'll have Aaron answer.
00:29:20
Speaker
It's funny, when we started speaking with customers, a few customers asked if we had read The Four Disciplines of Execution by Chris McChesney.
00:29:30
Speaker
And we hadn't.
00:29:31
Speaker
And so we read it as a team.
00:29:33
Speaker
It's an incredible book.
00:29:34
Speaker
And we've implemented 4DX, The Four Disciplines of Execution, in our business.
00:29:40
Speaker
And so the four disciplines are...
00:29:42
Speaker
create a wig, a wildly important goal.
00:29:44
Speaker
For us, it's a revenue target.
00:29:46
Speaker
The second one is find the lead indicators that are going to help you accomplish your wig.
00:29:52
Speaker
And then the third is create a scoreboard and self-report your progress each week.
00:29:57
Speaker
And then the fourth discipline is create a cadence of accountability.
00:30:00
Speaker
And so it's been awesome.
00:30:01
Speaker
We've implemented this in Alessio.
00:30:04
Speaker
Each quarter, we outline our goals, we identify our wig, and then we identify which lead indicators are going to get us to that wig.
00:30:12
Speaker
We have a scoreboard internally, and we go through it each week so we can track our progress.
00:30:18
Speaker
Everyone self-reports their progress to kind of hold themselves accountable.
00:30:22
Speaker
The book collected tons of data and showed kind of the positive outcomes that came from implementing these four disciplines.
00:30:29
Speaker
And we've loved it so far.
00:30:30
Speaker
We've done two full quarters with it.
00:30:32
Speaker
We had a great Q3 and we're on track to have a great Q4.
00:30:35
Speaker
So we'll continue to implement 40X in our business.
00:30:39
Speaker
I would say the word is focus,
Focus in Personal and Professional Life
00:30:41
Speaker
right?
00:30:41
Speaker
Both at work and then in our personal lives.
00:30:45
Speaker
So again, I know we talked about it at the beginning, but I love football.
00:30:48
Speaker
That's my passion outside of work.
00:30:50
Speaker
We play at 6 a.m.
00:30:51
Speaker
in the morning.
00:30:52
Speaker
So three days a week, the alarm goes off, 5.25.
00:30:54
Speaker
I get to get up, which is never easy, but you do it.
00:30:57
Speaker
You go and play football for an hour and a half.
00:31:00
Speaker
And it's almost like, okay, I've done a really hard thing, and it's not even 7.30.
00:31:04
Speaker
When you think about converting that maybe into a sales role, make your cold calls before night.
00:31:08
Speaker
Go do the hardest thing you know you're going to do in your day first.
00:31:12
Speaker
That focus on, okay, what are the things that are going to drive success?
00:31:16
Speaker
Personally, go do it.
00:31:17
Speaker
Go do it first.
00:31:18
Speaker
What's going to work for the business?
00:31:19
Speaker
Go do it.
00:31:19
Speaker
Go do it first.
00:31:21
Speaker
We meet every morning as an organization at 8.30 remote, in person, and we go through a roundtable quick as we can.
00:31:29
Speaker
Where are you at?
00:31:30
Speaker
What are you focused on?
00:31:31
Speaker
What do you need help with?
00:31:32
Speaker
And I don't think we've ever missed a day.
00:31:34
Speaker
Even if people are remote, we jump on and we do that meeting.
00:31:37
Speaker
And again, it's the focus.
00:31:39
Speaker
If the business is focused, if we're all wrong in the same direction, we know we can go and achieve the goals that we've set out.
00:31:45
Speaker
And it's not just pipe dream goals.
00:31:46
Speaker
We tick them off, right?
00:31:47
Speaker
We can show you the report we had.
00:31:49
Speaker
Pretty much the entire spreadsheet was green.
00:31:52
Speaker
Some of them went over.
00:31:53
Speaker
And even if you miss us, okay, what did I learn from it?
00:31:55
Speaker
How can I go and improve on that?
00:31:59
Speaker
An exercise I went through with my executive coach a few years ago was just what's a recipe of a great day for Kat?
00:32:07
Speaker
What are the things that I need to do every day to have a great day?
00:32:11
Speaker
In order to discover those, I just started journaling.
00:32:14
Speaker
Here's what I did today from waking up until going to bed.
00:32:18
Speaker
And then I would rate the day.
00:32:19
Speaker
Was it a good day, a bad day?
00:32:20
Speaker
Like, how did I feel?
00:32:22
Speaker
across a few different dimensions.
00:32:24
Speaker
And so looking back on those two months of journaling, I was able to see like, oh, here are the really obvious things that I need to do every day to have a great day.
00:32:34
Speaker
If I'm up at 530, if I spend time meditating before I open my phone, I have my coffee and sit by myself before my kids wake up and then get my email out of the way so it's not in the background, right?
00:32:47
Speaker
Like I know what it takes for me to have a great day.
00:32:50
Speaker
there's a recipe that I can apply.
00:32:52
Speaker
And what's great about having a recipe is no matter how you feel when you wake up in the morning, you can apply that recipe and still have a great day because it's going to ebb and flow.
00:33:04
Speaker
But hey, no matter what comes, if I can just do a set amount of things and have that goal of feeling really good or great by the end of it, that's pretty special.
Closing Remarks and Perfect Pitch Importance
00:33:16
Speaker
So I really appreciate that they have created that for sales reps across a bunch of different roles.
00:33:22
Speaker
And I would encourage anyone listening to think about that for yourself, not just in the work that you do, but also in your personal life, as both Aaron and Ryan have noted.
00:33:34
Speaker
Ryan, Aaron, Kat, thank you so much for being here today.
00:33:37
Speaker
We know it'll be very valuable to everyone who's tuned in today.
00:33:40
Speaker
So thank you.
00:33:41
Speaker
Thank you, guys.
00:33:43
Speaker
And of course, thank you for listening as we dive deep into what it takes to create the perfect pitch.
00:33:48
Speaker
If you want to learn more about our investor, Kat Kennedy from Kickstart or our founders, Aaron McReynolds and Ryan Harris from Alessio, we'll have a link to the company in a longer bio in our show notes at kickstartfund.com.
00:33:58
Speaker
You can listen to more episodes of Perfect Pitch wherever you listen to your podcasts.
00:34:02
Speaker
And if you like what you're learning, leave us a reviewer rating.
00:34:04
Speaker
We'll be back next time with more insights from entrepreneurs and the investors who fund them.
00:34:08
Speaker
So be sure to subscribe so you don't miss a thing.
00:34:11
Speaker
Stay classy, Salt Lake.