The Rise of 10X Sales People, When to Launch New Products, How to Approach Salary Adjustments After a Fundraise - Tactician #0035

15/01/2024

THE RISE OF 10X SALES PEOPLE

Tomasz Tunguz, General Partner at Theory Ventures, proposes the concept of a "10x AE" or salesperson, and illustrates how AI technology can amplify sales productivity to achieve exceptional results in “The 10x Salesperson”

• Parallel Between 10x Programmers and 10x Salespeople:

  • "10x engineers use their knowledge of technology to achieve astounding feats. Why wouldn’t the same idea apply to sales?"

• Role of AI in Enhancing Sales Productivity:

  • "With AI, we will start to see sales outliers who meaningfully outperform & break quota expectations. AI compresses prospect research time. AI writes emails. AI captures transcripts from sales conversations. All of this work is 50-80% automated."

• Nonlinear Productivity Gains with AI:

  • "But there’s a nonlinear productivity gain that exceeds this simple calculation. AI enables salespeople to parallelize their work: software can research 10 different prospects simultaneously, rather than just 1 for a human."

• Potential for Salespeople to Significantly Exceed Quotas:

  • "Salespeople who leverage that parallelization will book 10x more. They will break quota plans as outliers, drive meaningful change within their organizations, & improve the overall efficiency of their business."

WHEN TO LAUNCH NEW PRODUCTS

Daniel McCarthy, Professor of Marketing at Emory University, and Rodrigo Fernandes, CFO at Pingback, guide startups in deciding whether to launch new products by analysing their Customer Acquisition Cost in “Look at your startup’s CAC to decide if you should launch another product”

• Shift from Single-Product Focus to Multi-Product Strategy:

  • "Until recently, it was widely accepted that startups, constrained by limited resources, should primarily concentrate on a single product. Now, however, the conversation is starting to change... Thought leaders like Dave Yuan go so far as to discuss being 'born multi-product.'"

• Advantages of Product Development in High CAC Environment:

  • "When CAC surpasses a certain threshold, developing and marketing new products becomes more cost-effective than acquiring customers through traditional channels."

• Focus on Adjacent Product Development:

  • "We focus on products that integrate seamlessly with or are natural extensions of your current product... your existing customers are already asking for them!"

• Four Strategic Scenarios:

  • Low CAC, Limited New Product Upside:

    • "Your CAC is relatively low, and the prospective upside from a new product seems relatively limited... keep the single-product approach."

  • Low CAC, High New Product Upside:

    • "Your CAC is relatively low, and the prospective upside for new products is substantial... Keep customer acquisition but consider progressing with new product development."

  • High CAC, Strong New Product Prospects:

    • "Your CAC is poor, but the prospects for new products are strong... intensifying efforts in new product development could significantly reduce the CAC."

  • High CAC, Limited New Product Upside:

    • "Your CAC is poor, and the upside to new products seems limited... consider exploring alternative markets."

HOW TO APPROACH SALARY ADJUSTMENTS AFTER A FUNDRAISE

Jason M. Lemkin , SaaStr Founder, advises founders on how to manage employee expectations for salary increases following a successful round of venture capital funding in “Dear SaaStr: We Just Raised a VC Round. Now Everyone Wants Big Raises. What Do I Do?”

• Deciding on a Financial Strategy Post-Fundraising:

  • "First, you have to decide if you are going to 'hold the line on burn' after a fundraising. If you plan to — tell everyone. They may not be 100% happy, but they will get it."

• Acknowledging Legitimate Needs for Salary Adjustments:

  • "Two, sometimes — many times — at least some people do deserve a raise after you close a round. Are folks taking under-market salaries? If so, marking some up closer to market after each round can make sense."

• Setting Salary Expectations Relative to Funding and Market Rates:

  • "My rough rule is after you raise $2m, the founders shouldn’t work for < 50% of market. And after you raise $20m, most employees will begin to expect to make full market salaries. Between those phases, a discount to market may (or may not) still fly. But the % will need to come down over time."

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