The Brutal Truth About Hiring, Firing, and Building World-Class Sales Orgs | Chad Peets

When we spoke last time, you said that recruiting was harder than ever because reps just don’t care anymore. Has something changed from that moment?

1. Obsession Sets the Hiring Bar

Look, I need people, just to be blunt, that are a little fucked in the head like I am, right? When I wake up at 3:00 in the morning, before I become conscious of being awake, I’m thinking about work. I wake up at 3:00 in the morning, 6:00 in the morning, or 10 o’clock at night, and I can’t help it. I’m obsessed with making sure we’re doing things correctly, and I need people that are a little bit fucked in the head like that.

How do you measure “fucked in the head”? I know this sounds—

Look, if they’re being honest in the interview questions, it’s kind of easy. You ask questions like, “What’s your passion?” It’s a setup, for sure, and anybody seeing this will know it’s a setup, but you ask, “What’s your passion?” and just let them go.

If they’re like, “Look, man, my passion is I want to be the world’s greatest artist. I love to paint. That is my passion.” Okay, well, why do you work? “Well, I work because I’ve got to pay my bills. I’ve got to put food on the table.” Hey, listen, that probably makes you a better person than me, a more interesting person than me, and a more well-rounded person than me. But you work to basically fund your passion, which is painting. That’s fine. Good for you.

I work because I want to be the best in the world at what I want to do, and I want to be a part of important things. Fuck, man, I want to win. You ask people questions like that, right? I’ve asked them, “What drives you?” “Oh, I want to make money.” No shit, right? You’re in sales and you want to make money. Obvious. What actually drives you? What gets you up in the morning?

You get lots of different answers, but I want people to say, “Look, man, I want to learn every day. I want to be the best in the world at my craft. I want to have an impact. I want to change the way my customers buy.” Again, you want that obsession about what they’re doing for a living.

That was the first layer, and a lot of salespeople can do that pretty well. Is there any way that you can actually stress-test that beneath the surface?

Well, again, this goes back to—it’s not exactly stress-testing that, but the other thing you want to measure for is grit. John McB taught me that a long time ago. Ask them what they’ve been through in their life.

You wouldn’t have wanted to hire me. I grew up in an upper-middle-class family and went to USC. Coming out of college, I would have looked at me and said, “Nope, I don’t think so.” Now, ask me about some challenges I faced. I’ve been through some serious shit since then and come through the other side of it.

You want somebody who’s faced some challenges, right? So that when they’re in a sales cycle, they’re not generating enough pipeline, or I’m hammering them, or somebody’s hammering them about stuff, this isn’t the hardest thing they’ve ever done. Give me a military person, for example. I love that. Somebody who put themselves through college, right?

You don’t want to hear sad stories because you feel bad, but I want to know what you’ve been through. Like I said, I’ve been through some shit. I graduated in 2000—I think the bubble burst—and I left the firm I was working for. LinkedIn did not exist at the time. I had a phone, a pad of paper, a computer, 2 kids, a mortgage, and no way of making money. I sat in an office going, “Oh, shit.”

I want somebody who’s been through that in life. To me, startups are life and death, and if you’ve not been through something like that, you don’t really know. That’s the other thing: I want somebody who’s been at a small company. If you’ve been at nothing but large companies, you just don’t know.

Do you mind taking people who’ve never been anywhere before? I’m 22. I’m straight out of college. I’m fucking hungry. I’m here to work. I’ll devote myself, but I haven’t had a job before. Are you okay with that?

Well, remember, we fill field sales positions, right? Inside sales positions, so on and so forth. There is a certain level of experience. We can teach you a lot, but there’s too much risk in that person. I’ve got to know whether or not you can sell, and in order to know that, you have to have had some sales experience. Otherwise, there’s just too much risk.

Okay, some sales experience, dude. Again, so many founders take notes and listen religiously to this: some sales experience. Everyone says that they were the number-one seller and they closed big deals. What do you look for? What is the, “Yep, Harry’s a good dude. We want to have him”?

2. Sales Track Records Need Verification

If a guy’s got a track record of exceeding his quota, first of all, I always pull that string. For example: “You were at 103% of your quota last year.” “Yes.” “Okay, what was your quota?” “Okay, what did you sell against that quota? How many deals did it take? What was the biggest deal? Walk me through the biggest deal.”

Somebody who’s passionate about their career will know every single one of these details. They’re proud of it. They hang their hat on it, right? Somebody who’s not is like, “I think I was at 104% last year. I’d have to check.” You’d have to check?

Tell me, where do you rank amongst your peers? How many sales reps are in the company? “102.” Where do you rank? “Yeah, I don’t know.” How do you not know? I’d know. Fuck, if I wasn’t number one, I’d have a whiteboard in front of me that showed me where I ranked, and I’d keep track of it every day because it would drive me insane that I wasn’t number one.

Okay, so we learned that, but actually, dude, that was in a different category from what we’re in: customer service, and that was in—I don’t know—compliance management, whatever we want to call it, healthcare records, whatever. How important is it that they’ve sold in the same category that we have versus the same contract size?

3. New Logos Matter Most

Look, the most important thing—and again, I hope this isn’t redundant with our last call—is that they’re selling software. Fine, but there are lots of different ways of selling software. So, what’s the job I’m hiring for at any one of my companies? The number-one thing is pipeline generation and landing new accounts.

When I say, “Tell me about the deals that you’ve closed,” I don’t care if you say, “Well, look, I inherited this customer and I went and upsold them.” I don’t give a shit. That’s not a value to me at a startup, because at a startup I’m going to give you 50 accounts that have never heard of us. So I want to know how many net-new logos you brought in. If you can’t tell me that you brought in net-new logos, the interview’s over super quickly.

That’s the one thing that you have to have first and foremost: a demonstrated track record of closing new accounts. Then let’s talk about deal size. I’m getting to your domain question, but let’s talk about deal size for a moment.

Somebody will say, “Listen, we’re closing $5 million deals over here,” which for a startup is very unique. That’s the problem, because if you want to hire people who have startup experience, they’re not going to have really big-deal experience, because most startups aren’t doing really big deals.

Oftentimes, what I’ll get is somebody saying, “Listen, this guy—or gal—doesn’t have enough experience closing $5 million deals.” I say, “Okay, listen. I can go get you somebody who’s been closing a bunch of $5 million deals. They’re not going to have startup experience.” “Well, why not?” What startups do you know that are closing $5 million transactions?

You have to give on something. If you’re not able and capable of doing pipeline generation and closing new logos, I cannot teach you that. I can teach you, with proper leadership, how to go from closing $200,000 deals to $2 million deals. I can teach you that. By the way, the sales leader who sits on top of you and the system that we build is oftentimes like a super-rep, so I want the gaps to be gaps that I can solve for. I can solve for that gap.

When you talk about domain expertise, again, what can’t I teach you? I can’t teach you how to have integrity. I can’t teach you how to have grit. I can’t teach you to be fucked in the head. I can’t teach you how to go close new logos. But I can teach you my technology. With proper enablement, I can teach you that.

Again, lots of CEOs would be like, “Look, here are my 3 competitors. Go recruit from them.” My first thing back to them is, “Tell me about the quality of their sales organization.” “Well, what do you mean?” You want me to go take their people? Are their people any good? “I don’t know. They know my space.” Who gives a fuck?

Your competitors likely have a bunch of C players. You want to go hire C players simply because they know the space? That’s a short-term solve. Basically, what you’re solving for is that you want to reduce ramp time. You want them to be able to get enabled faster because they know the domain. Fine.

The problem is, 9 months from now, I’ve got a bunch of shitty fucking salespeople versus letting me go hire for talent and things I can’t train. Fine, maybe my ramp time takes longer, but a year from now I’ve got a world-class sales organization. You’ve got a bunch of B players who know your space.

Do you think founders are good at hiring CROs and heads of sales?

No.

4. Founders Hire the Wrong CRO

I'm not trying to be critical, but as I mentioned, we were offline. If I talk to 50 CEOs, 48 of them I'm going to very quickly determine are probably not right for me to work with. Doesn't mean they're not great, just not for me. Usually what'll happen is, by the first or second conversation, I will have looked up his or her CRO, and I'll go into the conversation and say, “Listen, if we're going to partner together, you're firing your CRO.”

Listen, the CRO you hired is the wrong one. You've never talked to him. I don't have to talk to him. I know where he's worked and the quality of sales organizations he's worked for. He's only worked for large companies. You have the wrong CRO. By the way, prior to this call, I went through LinkedIn and looked at every one of your sales reps. Not only are we going to get rid of the CRO, I'm going to hire the right CRO that's going to go fire half your sales reps. Are you prepared for that?

Most of them are like, “Fuck no, I'm not prepared for that.” I say, “Great. Nice to meet you. Have a great day.” They'll hire for the stupidest shit, man.

What do they get wrong? Imagine you're a founder listening. What do they get wrong?

Here's the most common one, right? “Listen, I'm going to be a $500 million company in 3 years.” Wonderful. I hope that's the case. “So I need a guy or gal that's managing a $500 million business.” Oh, you do? What does a guy that's only managed a $500 million business know about building a company from 0 to $500 million?

What they do is they hire for tomorrow, not today. If you do that, you'll never get to tomorrow.

You mentioned being brought into Snowflake to maybe increase efficiency and performance. What are the number-one ways that you see sales teams lose performance and efficiency?

5. Quota Alone Is Insufficient

Well, first of all, you have to define what is good. What am I expecting of you? You have to define, “Here's what I'm expecting from a sales organization.”

How are you measuring your salespeople? “I measure them by quota.” Okay. How else are you measuring salespeople? I get that you have a quota. Fine. By the way, you can miss quotas. That's also possible. I could set them too high or too low, but I could have somebody at 130% of their quota because they got lucky and did a deal that I want to fire them over. It can't stop with quota.

I want to understand what they do. I want to understand how many new customer meetings they're having. I'm going to hold them accountable to that number of new customer meetings. I want to look at steps in the sales process. I want to look at things like conversion ratios. I want to look at travel. Are they in front of customers? Are they doing things? There's a wide, long list of things that you have to be measuring.

What I see is companies get away from that. They stop measuring people. They stop holding people accountable. Look at attrition rates, for example. Tell me what your involuntary attrition is, which means people that you fired. “We're so proud of this. We only had to fire 2% of our sales organization last year. Such a great place to work.” I'm like, all you're telling me is you will let anybody work there and you don't hold anybody accountable. You should be shooting the bottom 10% of your sales organization every year.

What's yours? Is yours 10%?

6. Scaling Requires Attrition Planning

Total attrition. There's context for a scaling company. Total attrition should be about 25%. People hear that and they're like, “Oh my God,” because, by the way, it's super expensive to have that type of attrition—especially when I build you a productivity model and tell you what your forecast is going to be, and at the end of it I chop off 25% because I say you're going to lose 25% of your reps. They're like, “Oh my God, it's 25%.”

I think I want to shoot 10% for sure. At a minimum, I'm getting rid of 10%. Then I've got promotions. That's considered a type of attrition, right? Because I'm taking reps out of the field and bumping them up. Then I've got people who are going to quit. Every scaling company that I've ever been a part of, we will model 25% attrition, and we're typically right there.

If you start to get above 30–35%, you have a problem. If you're too low, you have a different kind of problem. As a company reaches a more stable state, which means they're hiring less and scaling slower, 20% attrition is pretty good.

What do people respond to that? They say, “That's bullshit,” because my response to you would be, “Dude, we're constantly slowing down the organization. If we have a 6-month ramp time and a 3-month hire period, I'm consistently 9 months behind on the 3- and 6-month periods.”

You plan for it with overhiring.

What does that mean?

You plan for it with overhiring. You hire too many at the same time. You plan the hire.

You keep hiring. You don't stop hiring. Okay, so when I'm building a productivity plan or a hiring plan for a company, I have to bake in the fact that I'm going to have 6% turnover every quarter. I have to hire ahead of that turnover.

Very blunt: how would you feel if I said 10% you fire and 10% quit? Maybe your hiring process isn't good enough. If 10% are quitting, that's quite a lot. And if you're firing 10%, maybe you're not actually being stringent enough with meeting your criteria.

7. Poor Performers Get Fired Fast

No. I mean, look, man. In what world are you not getting rid of the bottom 10% of your performers? Just bifurcate it. Okay, let's take that 10%: 5%, 4%, 3%. Come on, man. Everybody's going to have poor performers. You can't hire perfectly, especially when you're scaling.

If I'm going to go from 50 reps to 300 reps, you're going to hire fast. When you hire fast, you're going to make some mistakes. The consequence is you overscrutinize every hire and slow down the hiring process. Now you're not going to hit your recruiting numbers. You can't have that either.

How do you respond to people who say that creates a culture of fear? That's not a good culture to work in.

Bullshit. It's the opposite of that. If you have A players in your company and they're surrounded by a bunch of B players, and you're not holding those B players accountable, your A players will quit.

They do not want to look around and say, “I'm busting my ass. I'm an A player. I'm killing myself. I'm a shareholder in the company, and I've got 3 reps next to me that don't work hard, don't do the shit I do, and you do nothing to them.” Fuck that. I'm not going to put up with that. I'll quit.

Will you fire fast when you see someone not working? How fast? I think the trouble is, you often know—honestly, I think way quicker than we give ourselves credit for. Sometimes it's 10 days to 2 weeks in the worst of cases. Will you fire fast, or do you give them time?

Listen, we're all going to make hiring mistakes. As I just said to somebody yesterday in what was a bit of a tense conversation, we're all going to fuck up. The difference between you and me is, when I fuck up, I own my fuck-ups and I fix them quickly.

You like to pretend like you didn't fuck up, and you want to give it more time and claim that you didn't make a mistake, which allows the problem to fester and get bigger. So, will I fire fast? Fuck yeah. Yes, I will fire fast.