Lenny Rachitsky: uncertainty

Transcript context

…his idea that 92% of sales leaders or VPs of sales are white. Over 85% of sales leaders are white. So is that representative of the total population of who should be a sales leader? No, of course not. It's just representative of the fact that like, oh, you don't want to innovate here. Just hire someone who's been there, done that before. So you get a lot of sludge in the system. You get a lot of people doing the same shit over and over again even though it doesn't work, which is kind of the opposite of that Einstein quote, right? So founders don't know how to set comp plans. They are just listening to what other people tell them should be the way they do it. There's a way it's done and it's really hard to break that. It's kind of like when you talked about waterfall versus agile. Once you do agile you're like, "Wait, why would we have ever done it the other way?" Well, it's because everyone was always doing it that way, et cetera, et cetera. No one ever got fired for buying IBM, et cetera. You get where I'm going. But the other thing Lenny that I think is problematic is everyone loves to optimize in the short run when it comes to revenue in sales. That's really I think the other big driver. If I offered you a plan that said, hey, you can grow by 20% revenue quarter over quarter or we can spike revenue by 75% this quarter though I don't know what that's going to do to the business in the future. Which of these do you want? Tell me how many founders really are willing to take option A? What do you think? Let's say I just told you those were your options. I can figure out a way to increase revenue by 75% this quarter though I can give you no promise as to what that means for the future. Or I can make you a plan where we increase revenue 20% quarter over quarter for the next six quarters. Which of those two plans would you sign up for? What do you think is a percentage of startup founder six months ago, eight months ago, 10 months ago to indefinitely that would've signed up for plans? Yeah, it's interesting. Hearing you describe the way it should be structured and then hearing you pitch this. I would definitely pick goal one. Let's grow. Let's get this. It'll work out, it'll work its way out. We'll figure it out later. Let's just keep new customers coming in. So I don't know. I guess like 99% probably choose that first one. Yeah, I think that's right. Well, I mean that is right because that's what everyone signed up for. But then all of a sudden, and again, that was okay because even if all your customers churned, it didn't matter because you could just go raise more money based on the growth and then just keep pouring more money on it, more money on it. No one gave a shit about the leaky bucket, right? Because you could just keep adding more water at the top. Now all of a sudden the faucet's off. So given this seismic change in the market, how is it that we can reverse the short term thinking and start to actually build good businesses? Because I think that's the real problem, right? The real problem isn't sales compensation plans and quotas. That's a symptom. A real problem is we all just wanted to have hyper growth instead of thinking are we actually building good businesses. I wouldn't say that we at Bravado were immune from this by the way. It's not like I'm sitting here on my golden throne pontificating to the masses. We made a bunch of decisions over the course of growing this business that were incentivized for the short term. Every single time we did that, it ended up being really expensive. Now, sometimes we caught that before money ran out and before we saw the problem. Sometimes we didn't and then we were like, "Oh, shit. It's a fire drill." But at the end of the day, there is no replacement for building a product that customers love and having a great go to market motion that brings that product and that value to your clients and ensuring that they actually are thrilled that they bought your product and are getting a lot of value from it. Yeah, it sounds so simple, but the amount of companies that actually don't really care if their customers get value from their product versus just measuring top line revenue growth numbers and logos and whatever is I think more meaningful than people are willing to admit.…

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