Seed to Exit
Welcome to Seed to Exit, the ultimate podcast all about startups, scaling, and venture capital. Your host is Riece Keck: Startup veteran and recruitment entrepreneur.
Join us as we dive into the journeys of startup founders and venture capitalists who share their insights, successes, and lessons learned from seed stage to successful exit.
Each episode, we bring you candid conversations with startup founders, executives, and investors. Whether you're looking for inspiration, actionable advice, or a deeper understanding of the startup ecosystem, Seed to Exit offers invaluable knowledge and real-world experiences to help you on your entrepreneurial journey.
Tune in to Seed to Exit and get ready to be inspired, educated, and connected with the exciting and ever-changing world of startups and venture capital.
Seed to Exit
Dan Heck, Partner at Stage 2 Capital | From Target to VC | Outbound Sales Mastery and AI in Lead Generation
How does one transition from a corporate giant like Target to the fast-paced world of venture capital? Join us as we sit down with Dan Heck, who recounts his unique path from the storefronts of Minneapolis to the investment offices of Hyde Park Angels. You'll uncover the pivotal moments that shaped his journey, including a transformative experience at the University of Chicago and the strategic moves that helped him overcome an initial lack of experience in technology and startups.
Ever wondered what it takes to build a killer outbound sales strategy? We break down the essential components with insights from Daniel. Learn how to craft a tactical sales compensation plan, develop a dynamic outbound playbook, and adapt to ever-changing market conditions. With real-world examples, such as a company targeting the restaurant industry, we explore the nuanced role of AI in sales and the critical balance between automation and human touch. Plus, discover how community-based selling and events can serve as powerful lead generation tactics.
Finally, we dive into the crucial transition of sales responsibilities from founders to first sales hires. Daniel shares vital tips on identifying the right talent for scaling your business, especially in niche markets. We'll discuss the importance of industry expertise, the pitfalls of hiring flashy resumes from large companies, and the role of investors in supporting growth. Tune in for all this and more, and arm yourself with actionable insights that could change the trajectory of your business.
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Youtube: https://www.youtube.com/@seedtoexitpod
Welcome back to another Seed to Exit episode. Everyone, as always, this is your host, rhys Keck. I'm happy to have you here and listening. Today. I had the pleasure of interviewing Daniel Heck. Now Dan is a partner at Stage 2 Capital, which is a very unique VC firm backed by elite go-to-market executives from the world's top software companies like HubSpot, slack, atlassian and more. Stage 2 leads investments at the Seed and Series A level and leads investments at the seed and series A level and at stage two. Dan has led investments in early stage startups like AeroCloud, cable and Pair. Prior to coming to stage two, dan has held partner positions at other venture firms, where he invested in brand name companies like PostScript, tubi and Branch. So, without further ado, let's go ahead and get into the interview.
Speaker 2:You're listening to the Seed to Exit podcast with your host, rhys Keck. Here you'll learn from startup executives, founders, investors and industry experts. You'll learn from the best about building amazing products, scaling companies, raising capital, hiring the right people and more. Subscribe and listen in for new episodes and enjoy the show. Subscribe and listen in for new episodes and enjoy the show.
Speaker 1:All right, Dan, excited to talk to you about a lot of different things. Welcome to the show.
Speaker 3:Yeah, thank you for having me Excited to be, here, Absolutely so.
Speaker 1:I had the chance to take a look at your background and you really got an unusual path in terms of how you got into venture in the first place. You started out working at a large corporation here in Minneapolis where we both live, working for Target, which I think is a rite of passage for a lot of folks in the Minneapolis corporate world. What made you want to get into venture and what was your path then?
Speaker 3:Yeah, so you know, I went to undergrad at University of Chicago, you know, a great place very focused on teaching you, at at least ostensibly how to think and solve problems in an abstract way, which is really helpful, and so I wanted to complement that kind of component of my education with something that's really practical and hands-on, and so Target was a great place to do that, because they basically give you a P&L to run, or a portion of a P&L In my case it was the inventory side, the P&L for a bunch of different components of their merchandising business, and so that was great. When I was in college, I was admitted also to the University of Chicago's business school, so after three years at Target I kind of had a decision of like okay do I want to pursue that or not?
Speaker 3:And at that time, Uber and Airbnb and a lot of startups were kind of ascendant.
Speaker 2:The cultural landscape and I was like hey, I think I want to do something more around technology and startups and venture.
Speaker 3:You know I didn't even know what venture capital was, I would say even when I went to business school. You know I could probably describe it at a basic level but you know I wouldn't have known more than one or two firms, maybe zero, I didn't know really anything.
Speaker 3:And when you get into business school they have kind of like what do you want to do when you grow up, type of stuff, and you do like oh you know, and maybe I don't know how helpful it is in practice, but for me it had a big impact because one of the little assessments I had at Venture Capital was like number one of 38 things on the list or whatever.
Speaker 3:And I just like I hadn't really thought of it as like, oh, this is something I could do, you know, kind of aligned with your question of like my background wasn't really relevant. I'd never worked in startup, I didn't know technology, really I'd never learned anything about you know anything related to that ecosystem no-transcript. You know there's a lot of work between when it was number one on that list and when I ended up, you know, getting a role. But that's kind of how I got into it, or it got onto my radar originally.
Speaker 1:Cool, yeah, and yes, I'd love to hear the rest of the story you were learning too.
Speaker 3:Yeah, for sure. So I after I kind of realized, okay, this is something I could do, the very next thing I realized was that I was woefully underqualified, kind of like.
Speaker 2:I alluded to.
Speaker 3:I never worked in technology, I never worked at the startup, I never worked in finance, which is kind of the three components of venture capital, and you know, on top of all that, you know it's fairly competitive. There's a lot more people want to do it than people who end up doing it.
Speaker 2:So I was like okay, if I'm going to do this.
Speaker 3:you know, if I have any chance, I kind of need to put all my eggs in this basket and take a shot at it, and so you know, the first thing I did was just get to know other folks who were pursuing venture or already had jobs, who were in the booth ecosystem.
Speaker 2:You know, essentially try to get a foot in the door, not in terms of a job because I still wasn't underqualified but at least learning the vernacular and the ecosystem.
Speaker 3:And those folks were generous with their time and I've actually ended up with an internship with this group called Hyde Park Angels, which at the time they hired, you know, business school students to do their associate program, and so you know, I was able to convince them to give me a role, and I targeted them specifically because it was a lot more intensive than some of the other.
Speaker 3:you know internships where I just frankly wasn't qualified. Some of the more prominent venture firms, even in Chicago. I just wasn't going to be chosen for those roles and they were like hey, do this for 10 weeks. It's like I need a lot more than 10 weeks to like be qualified here and so it was like a year long program where you were working, you know, 20 plus hours a week, essentially doing a lot of their sourcing function.
Speaker 3:And so I kind of networked my way really hard into that tandem with just learning as much as I could reading blogs. You know, developing opinions on companies. White Company A was interesting and trying to leverage my background from Target, which is really focused on supply chain and retail and e-commerce, and I was kind of off and running from there. I did HPA For most of my business school experience. I ended up doing it for 18 months, sourced a few companies that ended up being investments, supported a few others that ended up doing quite well also, and that was really my entree into the business. So when I was there, you know, I sourced investments into a company called.
Speaker 3:Pravi and Branch, both of which have gone on to be, you know, quite a bit larger than they were when we started. And then I also, you know, did a project and supported our investment in Fork Heights and did some work with Shipob as well. All those companies just kind of you know a little bit of like. I found them interesting and a lot of potential and promise because of the target background and a little bit of right time, right place.
Speaker 1:probably too Very cool. So fast forward a few years. You're now a partner at Stage 2 Capital. You've done really well for yourself and I was really fascinated by the pod model that you had mentioned earlier when it comes to pairing your more traditional VC investment with go-to-market strategy, and you're specifically investing in B2B SaaS companies that can use that expertise. Can you go a little bit more into that model what that looks like in practice?
Speaker 3:Yeah, sure, and I'll just take this stuff back to and share, like why do we even do that? So?
Speaker 2:when.
Speaker 3:I joined stage two, I'd been in venture, you know, probably six, seven, eight years, something like that, at that point.
Speaker 3:And one thing that was clear from every entrepreneur that I spoke with, they tended to express their aspirations something along the lines of hey, we want to be as big as possible or want to get to a hundred million or a billion dollars in revenue, which are really good goals, certainly goals that we would support as well but in practice, the only way to get there is by building a great go-to-market team, building a great revenue function and building a great organization and instituting great processes around all those things. And so it's a little bit of a head-scratcher when you look at the venture landscape. There's a lot of great firms, many of whom have platform teams, who support some of those things on a project basis or for a set period of time, but there's not a firm that's been built from the ground up to say, hey, how do you do go to market? Well, so that's essentially what Stage 2 kind of set out to do and why we exist. There's a few components.
Speaker 3:One was, as you mentioned, the pod model, and so our team is seven partners, essentially about half of whom have investing experience, which is more of my background, as we've been talking about, but the other half of whom are go-to-market leaders and executives, and so in my case I work with this woman who you know. I met at my previous firm, a firm called OpenView. She ran the you know the platform team there for a time and helped a lot of those companies practically, but before that she built and scaled the teams at NetSuite.
Speaker 3:So the idea is you kind of, as an entrepreneur, get the best of both worlds, where, if somebody who's been an investor and all the skill sets and benefits that hopefully brings, alongside someone who's been an operator, who's built sales teams and knows how to evaluate what's working, what's not working and bring really practical and specific things to inflect. You know how your go-to-market org and function is performing.
Speaker 1:Well, I think that's a huge value add because, you know, at this point, money I won't call it a commodity and certainly the fundraising environment is harder than it was a couple of years ago. But I think now, at this stage of the game, VC firms really need to be able to bring additional value to their portfolio companies beyond writing a check Right, and the way that you are doing it is is a huge value add in terms of helping them grow. So, from a from a practical perspective, let's say that you know, you sign, the check term sheet is done, they're now officially a portfolio company. What do the next steps look like in terms of helping them grow? And I won't say get off the ground, because they've already found product market fit, but continue to expand?
Speaker 3:Yeah, I think there's, you know, idiosyncratic things that are different for every company.
Speaker 2:I can give examples of those things. And then we also have methodologies that we, kind of you know, bring to every company.
Speaker 3:So I'll start with some of the methodology. So one of the first things we do is what we call a go-to-market review, where we essentially take a lot of the presets that we think are important for building a great go-to-market organization. So I'll just share one as an example, which is what we call leading indicator retention.
Speaker 3:So, this concept of what we call leading indicator retention, which essentially early stage companies you don't quite know like what your net retention is going to be at scale. You don't quite know who's going to churn or not churn but you probably have a sense for like what does a healthy customer look? Like you? Know they're probably logging in a certain amount of time.
Speaker 2:This is different depending on what your company does, you know, but by and large.
Speaker 3:They're probably taking some set of product actions, maybe in a particular order. They're logging in with some level of frequency, they're reaching out to your team, they're getting live or hitting certain checkpoints in a certain amount of time All these things that are measurable and most early stage companies don't have. Has developed a lot of these frameworks and he also teaches at, you know, harvard Business School, kind of applying these frameworks as well, or, you know, teaching them to other folks.
Speaker 2:You know, bringing those to the companies that we work with and saying like well, what does it look like to?
Speaker 3:operationalize this in your business context for your product, for your market, your business context for your product for your market.
Speaker 2:How do we measure that? And then you know, how does that essentially inform what we do, with, how we talk to customers how we upsell or all that type of stuff.
Speaker 3:So you know that's good market review. There's other components. That's just one example of you know what we typically help folks out with, hopefully, but just give a more practical example.
Speaker 1:No, I love that and frankly, I mean even the resources that you share for free on your website, in terms of all the different playbooks and different resources. How do you develop this type of motion for this type of customer base? They're fantastic. So I'm sure that speaks to the resources you give your actual portfolio companies, Any successes that you can share from pre-investment to post-investment in terms of a big difference that you made for a particular company.
Speaker 3:Um. So we always try to, you know, make these types of projects like pretty actionable and specific, and you lose all the stuff we have on the website, like we think there's a lot of value in like being really specific. I think VCs kind of tend to give a lot of generic advice in the mold of like grow faster and like burn less money, and so we try to be pretty specific, so a lot of those assets are around.
Speaker 2:that it's like how do you build a?
Speaker 3:sales compensation plan. How do you build the go-to-market section of your board deck? Like very tactical. And so one example one of our companies you know they were focused on like how do we build an outbound sales motion? Essentially Like, how do we get more outbound volume from leads in our ideal customer profile? So before they had kind of a single marketing person who was running outbound on multiple URL domains and was just kind of figuring it out, still early days, and so obviously that's something we've seen in a lot of companies, and so the big thing that we recommended.
Speaker 2:There is like, hey, we need to build a playbook for how we interact with these folks. And so they already have that on their radar.
Speaker 3:We help them codify that playbook and then hire a business development team to do direct outbound to those folks and saying what's the profile of these people, what's the messaging they should be using, how frequently should they be calling versus emailing for this particular company's context? And then we helped hire those people from our network of like, okay, you know, these are the people we should be targeting, these are the companies who do we know in our network? And then you know, instituting what does success look like?
Speaker 2:You know there's a model one of the assets on our website is a good market scaling model, essentially, and so help them deploy that in the context of their business as well and make sure they hit their target so that's one example.
Speaker 3:I certainly could walk through others, but again, trying to be really tactical and specific and strike a balance between, like we know, methodologies and frameworks that tend to work for most companies, but also knowing that we don't just want to slap that onto every company we see, there's always company-specific and market-specific contexts that you need to incorporate into that type of work.
Speaker 1:Yeah, absolutely, and I think a lot of the thought, at least from the go-to-market leaders that I've talked to, is that the thought around how to approach go-to-market, but particularly outbound, has really been changing in the last couple of years. Right, because it used to be fairly cut and dry in terms of, let's say, we're hiring that outbound team like you mentioned, like you hire X reps to make Y number of calls and that's going to get a Z number of meetings and mathematically our close rate is this and that equals that ARR. But I feel like the market has shifted, particularly buying behaviors, and so that's not perhaps as cut and dry as it used to be. So how is stage two evolving its advice to their founders in terms of growing, particularly from an outbound perspective?
Speaker 3:Yeah, I mean, at the end of the day, companies always have some kind of funnel where, like, a volume of leads come in at the top and there's some decay rate on the percentages. You go through the relative steps in the funnel until you ultimately get to number of converted leads. And so that framework I do think still universally applies and like you're alluding to, is like there's a lot of changes, like outbounds, the example that you brought up, or that we were just talking about you know, now there's a lot of AI tools that automate a lot of that outbound, a lot of that outbound is still kind of low quality.
Speaker 3:So there's, you know, probably, if you think about a structural level, like outbounds is probably less effective than it was before and I would, you know, guess it will continue to be less effective. But that's not to say that there aren't industries that are going to be more effective. So, for example, one of the companies I work with, they sell to restaurants. They're actually technology to help restaurants answer phone calls.
Speaker 3:But restaurants are going to be cold because they are receptive to people sending them cold outreach and phone calls and things like that. They actually engage in that type of behavior. Another I spent a lot of time in different vertical markets like insurance brokers is another good one.
Speaker 3:It's like they do cold calling all day, so they actually have empathy for people who are cold calling them, and so I think, if you're trying to sell database software to a CRO like it's pulled out, I'm going to work, maybe at some level of frequency, but I would imagine that level of frequency is a lot lower today than it was before, and so you need to adopt the playbook you know, aligned with how those people are buying. Maybe it's more about events.
Speaker 3:maybe it's more about network or community-based selling, but there are industries too where you know the old way of doing things actually still works pretty well, or even better, and again at the high level. You can always abstract it away to some kind of funnel.
Speaker 2:I think what's changing is the sources of where those leads come in from the top of the funnel and how effective different tactics are in different markets, and that's really what you need to be attuned to more than anything.
Speaker 1:I would say yeah, I think you're reading my mind, because I had a couple of things that I planned on asking about, and one of those was AI powered SDR and sales tools, and another one was community building. So let's go through them. There's obviously a lot of. I think. It started, probably about a year ago, with various tools like Outreach, alemlist or what have you doing? Oh, let's, let's do AI personalization for this particular prospect. And now there's companies that are coming out with full-blown AI SDR agents and saying we can do the entire discovery and prospecting for you, and then we just fill up your calendar with leads, and I think, in practice, those still have a way to go before they're truly effective. But what are your thoughts on the overall place of AI in selling? And you know, how far do we think? How far down the funnel do we think we can automate before we need to have a person in the loop?
Speaker 3:Yeah, I mean. Look, I think there's no question that, like, ai is going to be a big part of the sales process and a lot bigger in the future than it is today.
Speaker 3:You know, if you think about that on like a gradient or a spectrum, you know on the one hand you have like robots selling to robots. On the other hand, you have like everybody doing people. You know people-based work. Again, I think it kind of depends on the context. Like I struggle to see a world where, for high ACVs, that's done. You know purely AI to AI. But I would imagine AI plays a really prominent and important role in research and like timing of outreach and informing, messaging and what's relevant to particular companies, as well as on the back end, you know, codifying what the context of those call was. What did we learn and how can we inform that and help that particular customer with our product, with our product, our product. So you know that probably looks more like AI helping people sell to other people, whereas in higher velocity roles, you know, I think I tend to be a little bit more skeptical of like is a robot going to sell to a robot type of thing.
Speaker 3:You know there are people who believe you know that that's what will end up happening or something akin to that. I do think more and more can be automated. The higher the lower the ACB is. So I think if you think of you know a two by two like the higher ACB deals that are low, less frequency, like AI is probably going to play more of like a research and like how do we inform and arm our sellers and give them leverage.
Speaker 3:Maybe you can create assets better, you can make them more personalized, you can do more research, you can be more targeted in your outreach, but at the end of the day, a human being needs to convince somebody else to spend a million dollars on their software.
Speaker 3:I don't think it's going to be done algorithmically in the near-term future, and I would be skeptical even in the long-term future, whereas a lot more of the steps in the process can probably be, automated if it's, you know, a $10 or $20 purchase, but again like there's probably an individual at the end of that chain, and so you know different roles, have different tools, that are roles to play in that gradient, but that's, you know, my best guess of where things land, as of where we're standing right now yeah, no, I totally agree it.
Speaker 1:You know, it's that that that low touch, more transactional sale, I think could eventually be be fully done away with. But you're right, nobody's, nobody's going to buy a million dollar software product talking to an llm um, another, another, I mean another thought that I had just now off the top would be even technical sales like sales engineers, ai assistants, like, for example, right now in this chat we have your you know day AI. What if there was a, for example, an AI that could be on the call, that's familiar with the code base and the internal technical specifications of the product and could just be there to answer tech questions that an AE doesn't know off the top of their head?
Speaker 3:Yeah, I mean again like it is possible, but I still so like. There's lots of great companies like. I don't know people familiar with companies like DemoStack or Salio or Reprise or all sorts of folks in the sales engineering space. I'm sure I left off lots of other great companies that I I've spoken with or know of and they're like building demo environments and I'm sure ai is a big part of their roadmap. But at the end of the day, there's a little bit of like, um, you know a fantastical vision of like, and then the ai is just going to give you the answer and you just like the disintermediates, the people all together. And even in the example you brought up, it's like you still need a really skilled salesperson to understand like. Is that actually true Like, is that the right context for this buyer?
Speaker 3:So AI can probably help a lot in terms of like surfacing or making a recommendation, but I do think it's a symbiosis of, like, great software and great process and you know, more of the process becomes software, as AI, you know, becomes more and more capable, but you still need a person to judge. You know that person's getting a lot more leverage by virtue of the process being subsumed by AI, but you still need a person who's skilled and capable to you know make a decision or judgment on like what's relevant for this customer.
Speaker 1:Yeah, totally agree. But you are right, it's going to be very interesting to see how things shift in the next couple of years. The other thing that you had mentioned earlier was the yes, to an extent the sales funnel always exists, with some sort of degrading. That's just going to be. It's the natural process of things. But in terms of where those leads come from and you mentioned the community building, you mentioned outbound how do you determine which type of lead generation is appropriate for different types of companies? Is it the ACV? Is it the type of product that they're selling? What is the thought process behind that?
Speaker 3:I mean, I think that the place that I would start well, the number one place I would start is asking the founder, because the founders know better than me or any investor. They know what's worked for them historically. Setting that aside and just purely speaking from an investor point of view, it's like there definitely are heuristics of what works better for what industries.
Speaker 3:So if it's a high velocity, relatively low, if it's a really low ACV, like below $1,000 a month or certainly below $100 a month, there are very few companies that I know of that have gotten to good scale maybe none by doing that with people. People are just too excited. So you need to build a demand funnel that you know brings in leads from the top, whether it's probably some combination of organic and paid and you know virality and like doing all that growth hacking stuff that you know has built companies like you know Figma and Calendly and Miro, and you know on and on down the list, many other great ones and on and on down the list, many other great ones. And those companies obviously eventually go very far out of market and there's really interesting things they do with informing.
Speaker 3:OK, these are the signals we're getting from our demand generation funnel, a lot of which is all automated and digital. But this role signed up from this company at this time and they sent it to these four people in these roles. So now we need a salesperson to be involved. Like, that's gotten to be pretty sophisticated and I think will only become more so.
Speaker 2:And the other side enterprise again heuristic is like well, you gotta like really know the customer.
Speaker 3:You gotta really know their problems, probably meet them at events, understand what they're looking for. And so I think you would start with the heuristics. And the heuristics is some combination of like ACB and industry, like how do these individuals buy and how much are they spending and how considerate of a purchase will that be?
Speaker 3:And there's all sorts of then you know common ways that people buy on the basis of those heuristics, then you also need to go in with an open mind of like this instance might be different. I don't know if that helps, but that's how I would think about it.
Speaker 1:No, it does, it does. And it's funny you mentioned Calendly because of course they have. You know, they have their enterprise sales teams that are selling to companies that are selling, but their their main product that most people think of is like oh, this is my personal Calendly that I just used and if you do that and try to sell your $9.99 subscriptions, you're going to have a terrible time. But yeah, totally makes sense.
Speaker 3:Yeah, no, they felt like we were investors at OpenView in Calendly and so you know, really good job of building that business and exactly like you're saying, it's like that $9.99 type of product like Got them very far. But you know, as with every kind of product led you know high velocity kind of low lower ACB company like they have a very big enterprise business now also.
Speaker 1:You mentioned earlier. You know talking to founders about what's working for them in terms of lead flow and you know there's very different types of founders out there and you know, sometimes you have your your Stephen was your technical non-technical. Sometimes you have technical founders and sometimes you have the business people that are just finding someone else to do the tech for them. What are some of the biggest or most common mistakes that you see founders making when it comes to their go to market strategy?
Speaker 3:Yeah, so a common one, I see, is like taking themselves out of the process too early.
Speaker 3:So either, like you, you know, one flavor of this is like hey, I'm a technical person, so like this is just not my skill set like I'm gonna hire somebody to do this and delegate, especially in the early days, like I don't know, you know depends on the product, but like you got to be out there and selling it and listening to customers understanding what they need, understanding what product features, you're looking for how that maps to what you're building and just being in the trenches and doing that work, at least for the first million dollars of ARR or so I think, is really critical so that the founder has empathy for the go-to-market folks they bring on later on, and so the founder has empathy for the customer and just empathy for the entire process of taking customer feedback and building the technology.
Speaker 3:It's a really hard and long and winding road and it's difficult to build that empathy if you're not doing it yourself.
Speaker 3:So definitely a big believer in founder-led sales for the first few hundred K at the very least, even up to a million or maybe even beyond. I mean, the further you can go, the better, right, as long as you're hitting the growth benchmarks and things like that. And then the other flavor is like okay, if you do that for a while. And then you're like great, I know how to do this, now I'm going to bring on somebody else and I can spend my time elsewhere. Typically what we see is sales is kind of the last thing to come off of the founder's plate. It's like it's easy to get leverage from you know technical leadership to set the product direction, you know relatively easier.
Speaker 3:Obviously, you have to be involved in everything all the time, but in terms of, like, the percentage of your time that you're spending on X or Y activities, having a founder and really the CEO involved in sales is critical, especially in vertical markets where, like industry expertise and industry credibility is really important. Oftentimes those CEOs really are. You know experts. Even above and beyond, you know sales folks. You can hire who know, even if they know the industry, and so, like taking your foot off the gas in terms of how you spend your time, these of you go to market once you've hired somebody. That's another common one that we see.
Speaker 1:And when you think about from a hiring perspective, let's say you've hit that first million in AR that you're looking for and you say, okay, now it's time to at least take the call it, the prospecting and closing part off of my plate. What should a founder be looking for in that first sales hire?
Speaker 3:Yeah, I think the important thing is you want somebody who's willing to do the work. A lot of times founders are attracted by hey, this person worked at XYZ company or their team was so, you know, a certain size, or they had a certain set of responsibilities which you know sounds really seductive. If you're a founder, you're like this person knows what to do. I need to listen to them. But in practice, the founder knows what to do, probably instinctively, better than anyone else, and you need somebody who's actually willing to do the work and a lot of times there are certainly counter examples to this and people who come in from those roles and crush work.
Speaker 3:So it's not to say that you should never hire that person, but we always kind of look at those hires with a very high, you know, degree of skepticism because by and large those people are used to having a lot of infrastructure, a lot of support, a lot of you know teams, um, a lot of leverage, in a way that like you're not going to get if you're the first sales hire certainly, uh, or even like one of the first five, ten, even if you have a team of five AEs and you bring in somebody with that level of seniority, they're just not willing to do work at like the lowest level of fidelity, at the lowest level of granularity that the company really needs.
Speaker 3:So that's the most common thing. You want somebody who has seen your scale. So let's say you're at a million, somebody who's seen a million and gotten to 10, but you don't want somebody who's gone from 50 to 100 or 200. It's just not as relevant. You want somebody who's seen where you are and like one or maybe two rounds beyond you. You don't need the person who's like taking the company public if you just raised your seed or series A.
Speaker 1:Yeah, I was going to say that's probably the one I've seen the most as well is that they get wowed by some flashy brand name at some large, well-established company like a Salesforce. And, oh my gosh, we got a VP of sales at Salesforce. And then this person comes in and is like where's my enable bin budget? Where's my $3 million SDR budget? And it just doesn't work. How mature or how strong, considering how go-to-market focused you are, how good do you expect a potential portfolio company's go-to-market function to be? Do they need to be strong already? Do you consider a poor one to be something of a big opportunity to value add? Does it just not really matter at the end of the day? What are your thoughts on that?
Speaker 3:Yeah, I kind of feel ambivalent, like, on the one hand, like the reason our firm exists is to help founders build a go-to-market team, and different folks are coming from different backgrounds and we have not me but a lot of the folks on our team who have led large go-to-market teams.
Speaker 3:They can work with people who are just learning all the way up through people who are ninja-level experts, and so I do think we can be helpful in all those contexts. I think the important thing that we're looking for is, like you know, growth needs to be there and that doesn't need to mean that, like, the go to market needs to be humming, but like, clearly, people want this product and they're finding you through some mechanism and we can amplify that and that degree. The way that amplification looks is going to be different on the basis of, like, how sophisticated the go to market already is. Sometimes it's like instituting, you know, things that other people would consider to be fundamental and then growing from there. Other times it's amplifying things that are already working, but I wouldn't say we have a strong view on like well, you need to already be doing.
Speaker 3:X or Y or Z, it's like you know you got to give people the benefit of the doubt If they came, if they're an engineer and this isn't their background. But they have people who found the product, who really are enjoying it, who are retaining and getting value from it. The company's growing as a result of all that and now they're looking.
Speaker 2:It's like how do I put this go-to-market?
Speaker 3:team in place. That's great. We would love to work with that same as we would love to work with somebody who's a multiple time founder, who knows how to do that, but wants access to the network or different frameworks or whatever the case might be, and so I would say we're relatively agnostic.
Speaker 3:But what we don't have any illusions about is like we can't do the work for them, like we can't say like, hey, you know, this is a no investor can do any investor who tells you, oh yeah, we'll fix it overnight. It's like it's just not how? Not the role of an investor. I don't think, um, and so it's like, well, yeah, it's growing 20 now, but you know we'll get it to 200.
Speaker 1:It's like it's just not, uh, how it works in practice so if someone comes in and goes oh yeah, I'm so excited to talk to you guys because I just hate sales and you guys can do it for me, it's no yeah, no.
Speaker 3:So I mean, all the vc platform functions, even us, you, we were founded as, like, the go to market venture firm. Hopefully it's like I wouldn't. We can't go in there and do it like we know the path, but we don't know the customers. We don't know how to sell them, we don't know how to speak their language. We don't know what's going to work for you or work with you to try and figure that out. Investor can build the company, you know, setting aside studios, incubation models, things like that. Like the investor's role is to support the company. You know, hopefully, give some good advice. You know provide access to people and frameworks and all sorts of stuff that can help, but you can't build a company, it's not the investor's job.
Speaker 1:Agreed Well, dan, you've dropped a ton of knowledge today, super grateful for the time we've been able to spend together, and I've been really impressed not only by what we've talked about here, but even the humbleness when we had talked before and you said I'm not a into venture or maybe coming from a non-traditional background like yourself what would be some of the best advice that you could give those folks?
Speaker 3:Yeah, I think just willingness to like, get your hands dirty, do actual work, ask questions. I think a lot of people nowadays maybe this is, like you know, my grandpa hat, or whatever- but it's like are more concerned with like hey, how do I look? Or what's the perception of me, and there is value in that. I don't mean to dismiss that, but like, very few people are willing to like actually like send a good cold email, like actually do research into, like what somebody might be helped might need from you, right, and so in venture.
Speaker 3:you know you either find good deals or you help qualify good deals, or you help them raise money. And it's just like figure out, like which of those three you can help out with, and just like don't be afraid then to like go out and do it. It's like if you see an interesting company like send it to an investor that you think is interesting. If they don't reply, like, follow up, respectfully.
Speaker 2:They still don't reply for emails, fine, like send 10 more emails like don't be afraid, you know so.
Speaker 3:I think that's the biggest thing is like be respectful but be aggressive and make sure you're doing it in a way that's not generic or that's specific and helpful to whomever you're reaching out to.
Speaker 1:Love that Got to add the value Cool Well, thank you so much for your time. It has been a pleasure speaking with you today.
Speaker 2:Yeah, thanks for having me, thanks for listening to See to Exit. If you enjoyed the episode, don't forget to subscribe and we'll see you next time.
