SDReady Revenue (2024)

[00:00] Hey, folks. My guest today is Gino Donati. He is building a great company called seed2c.com. They're helping SaaS teams build their sales development teams. Gino, you're ready to take us to the top? [00:10] >> I am. Alright. Let me know if you want me to drop it or I'll [00:13] And now what got you into this man? Were you a sales rep in one of these companies and then saying I'm gonna do it myself or what? [00:18] >> No, it's actually a slightly cooler story than that. I was living in New York and a buddy of mine, CMO got married to a girl up in Canada and asked me to head a team. So long story short, he's in Canada now, he had me take a startup into The US and because I brought a Canadian company into The US and we were successfully able to raise like 80,000,000, a Danish company found me and said, hey, [00:40] can What company was that? [00:42] >> No, not at all, it's called TouchBistro, iPad point of sale. Because we were able, we had such success there, a Danish company found me and said, hey, can you do the same thing? They're called Falcon Social. After doing the same thing for Falcon, a private equity firm said, hey, do you want to move down to Argentina and build? I can't say their name for privacy reasons, but can you take on our struggling portfolio companies and [01:07] >> build outsourced sales dev teams? So I moved to Argentina, built an outsourced sales dev team of expats, and then I said, Why don't I just do this for anyone instead of just this private equity firm? [01:18] Can you build a successful sales team in Argentina to sell to US clients? [01:23] >> Pre COVID, 100%, but they were expats. So it's they were living in Argentina or I was I was hitting up a lot of college kids saying, don't go into a cubicle, come live abroad for a year or two. [01:35] So how does this work? There's a SaaS company listing right now trying to hire their first three SDRs. What would you tell them? [01:41] >> I'll try and keep it as tight knit as possible. I would tell them before they decide on three, know your targeted addressable market, know your ideal client profile, and prepare. Don't throw bodies at problems, properly prepare. Set up your sales ops, set up your tech stack, and then hire bodies last. I can't tell you how many people hire bodies first and then hire me when they're behind the ball. [02:08] What's the best tech stack MVP? Are you talking about HubSpot CRM? Tell us the cheapest, quickest tech stack for your first three SDR hires. [02:15] >> Oh, I'm gonna get in trouble because I use [02:17] so many different ones, but you said best and then you said cheapest. [02:20] >> I'm gonna give you two different answers. If you're looking for the quickest out of the gate, easiest adoption SDRs don't have a learning curve and they use it within three days and know what they're doing, I would hands down say Usher Connect for social selling, for like automation on LinkedIn. Apollo is great. It has the data and the enablement packed into one. And then CRM, I like Free Agent CRM because of their price point. There's also [02:43] >> Salesforce, HubSpot, all the other ones. That would be the cheapest, quickest, easiest learning curve for an SDR. If you had to say best and you are sophisticated, like you physically aren't gonna overpay for a Ferrari that you can't take out of second gear, I would boringly say SalesLoft, Outreach, parlay them with a couple other, you know, data inputters, you notifications, ZoomInfo, etc. [03:10] Not cheap. Outreach potentially IPO ing soon, Henry obviously had a successful IPO in SalesLoft, Kyle Porter right there with him with an $80,000,000 war chest to go after it as well. So interesting, but that's what that feeds it up. So the next thing is the incentive structure, right? People I've seen founders just mess this up for years, and they come on the show and they get so frustrated. Say, Nathan, I had three AEs in 2020, I [03:32] had to let them all go, the quota missed or we didn't have enough leads for them or whatever. So like how should you set up the incentive structure for your first SDR hire? [03:40] >> Yeah, so I would say I try and get like rules that you can always stick to so I don't contradict myself because it does matter how much the product costs, if it's enterprise versus SMB, etcetera. [03:49] Take a real example. Let's it's a $5,000 a year average price point. [03:53] >> Some rules of thumb that scale up and down have at least 50% of base. Like don't go over, I can't tell you how many people are like, oh, we pay our SDR 60 ks and then 10 ks in bonuses, we don't know why they're not motivated to make more dials. Well, yeah, if they hit 200% of goal, they're up five ks more, but if you're a split with base and OTE, they split and go up, now [04:13] >> they're, you know, up 30 ks more. So I would always say rule of thumb SDR split half base half OTE. That's one. This one might seem super obvious, but really look in the mirror and see what results do you want to drive. I can't tell you how many people are like, oh, I want as many calls with as many of the right title, right company, and then I look at their comp plan and they're paying SDRs [04:37] >> if the deal closes. Well, the SDR doesn't control that, so if you want as many calls to the right person, right company, don't pay for opps, pay for SQLs. Right title, right company, get as many people to take as many demos as possible, and don't yell at the SDR if they don't close, it's not their job. [04:53] And then let's say that it is incentivized on close, So what should the quota target be for year one and year two, etcetera? [05:01] >> Yeah, so I've seen people that are like, well, hey, shouldn't I be making half of X if my ARR targets 300 ks, should I be making 150 ks? It actually has nothing to do with the ARR. Has to do with the profit margins of the company. So on the outside looking in, it's hard for me to make a quota, but again, rule of thumb, if you're talking about an inbound SDR or a blend or you're talking [05:26] >> about pure outbound? [05:26] You pick, give me a real example. [05:29] >> Okay, if you're a startup company that has a little bit of money, you want to take your, you know, put your toe in the pond to go to market, and you're like, what can I expect from an SDR? 100% cold. If you gave them targeted lists, I would say you can expect eight to 12 cold SQLs a month. If you gave them nothing, you're probably only going to see six to eight if you give them like [05:51] >> the idea, like, hey, go find founders, go find CTOs, but you're not giving them a list. You're kind of treating them like a hybrid. One pet peeve of mine is people use BD and SDR or BDR and SDR interchangeably. They actually should not be. That's gotten lost in time going 100 miles an hour at startups. An SDR gets handed a curated list and told to bang the phones, bang the emails, convert these people, convert. A biz [06:14] >> dev gets handed an idea, hey, we've done really well with fintech companies, but we want to try B2C companies. Which ones would you go find them? They have to build the list, find the title. It's a very, very different role. So SDRs can carry a larger quota. If it's a curated list, I would stick to my eight to 12 for 100% cold. If you go mid market or down, you can see as high as 15, but that's pretty [06:40] >> much all you can expect out of a 100% cold SDR. [06:43] And what salaries are founders paying their first couple SDR hires as a base? [06:48] >> Yeah, great question. I'll do some plugs here and I'll also tell you what I think versus what they are. The most common package right now you'll see is probably a 60 base, 65 base with another 10 to 15 sprinkled on that depending on how well funded they are, etc. Going back to my original suggestion, I highly advise people to hire the motivated. Hey, I know it looks bad that your base is only 40, but when you're [07:13] >> at 150 of goal, anytime you're at 101% of goal, I would tell to a recruiter or a hiring manager, the lower your base, the higher your OTE, the better if you're an overperformer. If you're an underperformer, the higher the base, the lower the OTE. So that will filter out a lot of people that don't want to come in and bang the extra 10 dials a day to get the extra 10%. So it really does filter out [07:36] >> the wrong people if they're like, Oh, I really want a high base. Do you really want to be an SDR? Do you really want to be an AE? Because, no offense, that's more like a CS role. You want stability and guarantee with some little upside that you care about? Jump on the other side of the fence. [07:52] You're talking SDRs, know, hey, they're responsible for conversion, right? 50%, 50% in terms of on target earnings, but what's the AE do? [07:59] >> Yeah, good question. So if I had to draw the perfect plan, first and foremost, you hire an SDR before you hire an AE. I said it, literally 90% of people I talk to don't do that. They start with an AE and then they work backward. Hire an SDR, you founded this company, if you can't sell it, I would question its sellability and the market need and all of that. So first and foremost, get your SDR, let [08:25] >> them book you meetings, let them focus on so you can focus on other aspects of the business. The second you have enough meetings that you feel like someone else is justified, then you hire an AE. So that's step one. SDRs in my humble opinion book SQLs or meetings with the right person at the right company. Their job [08:49] >> is to get someone with the right title at the right company to take a call curious about your elevator pitch, the use cases, the value props, the pains you overcome. That is a lead. AE's job is to take all leads, not opportunities. Their job is not to close the door. Their job is to create curiosity, create need, create want, take the right person at right company, and that AE should actually be measured on how many right [09:18] >> title, companies move to opp, how many opps move into pipeline we can call it, we can call it forecasted, and then last but not least, ARR in the bank. [09:30] And then CSMs, right? So should the AE come off the account after the sale, and if they're passing off to a CSM, should the CSM have a quota for net dollar expansion or retention? [09:40] >> Yeah, it's actually what I did at Box. A lot of people don't know that I actually came from that side of the fence. I was in SDR struggling to move to AE, no one gave me a chance. Box was hot like eight years ago I think I went there, and they let me in at enterprise renewals and I was like, I'm going take an SDR approach to renewals, let's do this. So my answer might be very [09:57] >> different than your traditional VP of CS or VP of success, but I'll tell you my opinion. If I am starting up and you have those flagship accounts, I would say leave all accounts with an AE for the first year. Let them expand those. Eat what you kill kind of thing. If you're getting into a more sophisticated setup and you can hand off because the AE has so many discovery calls, you should always have the AEs going [10:27] >> after net new if you can. Make them hunters, not farmers, but a lot of startups, I can't tell you how many AEs I know, I'm not calling them out, twiddle their thumbs, say they work a thirty hour, twenty hour work week, why would you not have them holding their most valued accounts and growing them? They know the person they sold, they know the use case thoroughly, and now they can take it and talk to the other [10:46] >> departments about that. On the flip side, if you do have an AE that has too many demos to manage their pipe, 100% have them handing it off to a CS. You can do some sort of rev share in the first quarter or two, whatever you want. I've seen a lot of different things work. What I will say is motivate people to do what you want. If you want the CS to get the dollar amount raised, compensate [11:11] >> them on that. At Box, I believe as a renewals rep, we had our denominator and then it moved by five percent every year because they wanted us to slowly start cutting into the discount the AE gave. [11:24] Be specific on that, right? So if you're a CSM at Box when you're doing this, or what you're seeing work now, is a CSM getting assigned a million dollar book of business and needs to grow to a million 5 in twelve months? [11:36] >> Yep, and we could do that by adding more value, selling more features, or adding more seats. [11:41] And what's the structure there? Is it the as the AE or the SDR, fiftyfifty OTE or what? [11:47] >> No, that's I'm trying to think. It's been a long time. It was definitely not fiftyfifty because I remember I left fiftyfifty and at the time I [11:55] thought Yeah, talk about what you're seeing now because that was eight years ago. Mean, a lot of people will say if you incentivize CSMs too much on upsells, they're gonna be too transactional and not actually helpful. [12:03] >> Yeah, I just don't wanna give you the wrong answer. I don't work that close with CS. I build outsourced sales dev teams, I work hand in hand with SDRs to hand off the AEs, and I also work with AEs that are acting as CS, so I teach them best practices on how to grow their accounts. I wouldn't be able to quote you like the industry standard today for like a CS a 100% of the time. [12:23] Yeah, okay, this is interesting. So hey, if people wanna get going with you to help them do all that stuff we just talked about, what's the minimum cost per month? [12:29] >> Good question. So I get you an outsourced SDR. We kind of build a totally different package, just so you know. So we build fractional sales dev teams, so a lot of SDRs get hired and left in the corner with a founder that doesn't know what they're doing and wondering why they're not succeeding. So every one of our SDRs start at 5 ks a month, that's full time or 2,500 a month for part time, twenty hours a [12:50] >> week. They come with a coach that does two one on ones a week, you basically get an SDR plus a manager for out the door for 2,500 or 5 ks a month. I highly recommend 500 a month more at least in OTE, ideally the double. Wait, [13:09] you know, you lost me. So it's 5 ks a month that SDR to work twenty hours a week with a coach? [13:15] >> No, half that. 2,500 is twenty hours, 5 ks full time. [13:19] Got it, okay got it. 25, okay perfect. And then sorry, say that second thing again? [13:22] >> Yeah, absolutely. Some people are building from scratch, so they don't know how to make a quota. So what I tell them is, what would you be happy with for the first month result, second month result? And I tell them, make sure an SDR is making at least 500 at part time and a thousand at full time. A lot of new founders don't like the idea of a fiftyfifty split because they have nothing. It's not apples and [13:46] >> 500 what? [13:47] Make 500 what? [13:49] >> Additional, like dollars in commissions. So if they book five meetings for part time, I tell them pay a $100 per SQL. Like that, don't overthink it. And I apologize. Earning an extra 500 a month at part time or an extra thousand a month. So a lot of times we'll run pilots that contradict what I just said. I'll say, hey, we don't know what they're gonna be able to book and you're letting them take some inbounds too and [14:11] >> you have them running their first ever outbound campaign, so let's just work backward from the money. How many meetings do you need a month to pay for this? And some I'll give you some napkin math. Some people will say right now, if I got an SQL for $500 and an opp for a thousand, we'll be in the green, and you have to bake in obviously the fact they have bases and stuff like that. So they'll say, if [14:35] >> I'm paying them 5 ks a month out the door that includes their manager, if they're booking 10 for me, I can give an extra 100. So I'm getting 10 meetings for $6,000 that I'm severely in the green on our ARR and our closing percentage and again, it trickles down. [14:51] Interesting. Okay, now if someone's listening right now and start paying you $2,500 a month to do this for them, do they have to have the tech stack already set up or will you get that set up for them included in the $2,500 per month? [15:00] >> I'm a yes man. The answer is yes. So some people have their tech stacks set up. I come in with personnel. Other people have a blank slate. They ask me for tech stacks. I yeah. I hate to I'm not a VAR, but there are people that I've negotiated. I won't I won't name them. I've negotiated some really good deals that are severely less than and I we also So does that that's what I was asking, Gino. [15:23] Let's say that they see someone listening right now stops paying you in a year and a half, do you pass the whole system to them or do you hold on to the system? [15:31] >> Yeah. A 100%. I I hold nothing. [15:33] Emails, passwords, logins, leads, everything in the system. [15:37] >> You brought up a great point. We actually never had any of that. We work from your environment. My SDRs are in your domain and your CRM. I'm not buying stuff. I'm negotiating agreements for them. So that's why I said I'm not really a VAR, but the people we work with and recommend, they have a set price that's really less than what you see list cost, that's not even most important. I have a lot of people that [16:00] >> know what I do, know I build programs and I've had clients now for continuing five years. They actually let my clients start off with month to month or thirty day, ninety day trials of enterprise software where they don't Got it. [16:11] You have those deals, yeah. So just to be clear, that sales rep then would have if I was hiring one of these folks for Founderpath, it would be like sdrfounderpath.com in my HubSpot CRM, like in my ZoomInfo account, and then so if you and I if I stop paying you six months from now, we can sort of still have the systems built. [16:28] >> Nailed it. [16:28] And Can I [16:29] hire that SDR full time or do you hate me if I do that? [16:31] >> I don't hate you at all. [16:32] We Okay. [16:33] >> I call it a golden handshake. We we do 15% of their first annual base, very similar like a recruiter. [16:38] Just the base or base plus commission? [16:40] >> Just base. [16:41] Okay. Interesting. So with 60 ks, you're gonna take, you know, 7,500, 10,000, something like that. [16:46] >> Yeah, 9,000. [16:47] How many SDRs have you placed? They started with you and then they're full time at a company now? [16:50] >> I currently have just under 70 SDRs month to month within clients. I keep 20 clients at all times. I don't really like going over 20. I'm stretched too thin and wow, we placed five last month. I would say if I really had to like put us on par, we fall between three and five full placements at our clients, they like converting. It's like they pay to play. They usually take the best ones. Everyone's like, this is [17:18] >> like against your own interest. Not really because I would lose them anyway to a full time w two role, why not lose them to one of Yeah. [17:25] >> My Exactly. Makes sense, you know, hey, this is really valuable. [17:28] We're out of time. Let's wrap up with this. Where can people go by the way, they wanna sign up for this and check you out? [17:35] >> Yeah, yeah. It's www.seed2c.com. Seed, the number 2, and the letter c. [17:39] >> That's my consulting. We have a free Slack community, AKA the head of sales at Brex and I started it. We just passed 2,200 SDRs. That's called SDR Ready. We do a wine Wednesday. You can find that every Wednesday, we post a video and put the link under there. It's completely free. [17:55] Guys, there you have it. Let's wrap up Gino with the famous five. Number one favorite book? [17:59] >> Oh, I'd say The Art of Selling. [18:01] Number two, is there a CEO you're following or studying? [18:05] >> Not CEO, but definitely Sam Blond at Brex. I've watched him since his benefits days. He teaches me a lot and I get to see him at least once a month in Miami. [18:14] Number three, what's your favorite online tool for building seed2c? [18:18] >> Favorite online tool for building seed2c? Well, GoDaddy was probably the easiest. I'd say UsherConnect. They are unknown. It's a great software. No one's ever heard of them. They're powerful. [18:28] Number four, how many hours of sleep do you get every night? [18:31] >> Eight hours every night, and I work sixteen hours a day. [18:34] And what's your situation? Married, single, kiddos? [18:37] >> Married and just moved to Palm Beach, Florida. [18:39] Very exciting. [18:40] >> Okay. And how old are you? [18:41] >> 37. [18:42] Alright. [18:43] >> Last question. Something you wish you knew when you were 20. [18:45] >> I wish I knew that you get out what you put in. Honestly, that's it. [18:50] Guys, seed2c, he's got 70 SDRs on his team, about 20 customer SaaS founders that are building SDR teams through him. He builds them in your environment, you can hire them at the end if you want and pay them a 15% fee for bringing them on. It's a great way to get started in a low risk way. You're trying to figure out how to scale your sales operation. Gino, thanks for taking us to the top. [19:07] >> Thank you, Nathan. [19:10] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday, 1PM [19:35] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [19:57] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [20:19] up for that at nathanlatka.com slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. If you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, I do it so that we can all learn. We have to counter those people. We [20:39] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.