The Harris Consulting Group Revenue & Valuation (2024)

hello everyone my guest today is richard harris he is teaching reps how to earn the right to ask questions which questions to ask and when to do it as the primary growth driver behind his neat neat selling methodology 20 plus years of experience he's got clients that include gainsight google cloud sales loft and others he brings a liberal arts degree in school of life to sales he's been a full cycle account executive sdr sales manager director of sales you name it he's done it richard you're ready to take us to the top thank you that was the longing i hate my introductions no i think you're right i have to caveat this by saying i get consultants asking me all the time to come on the show because they sell sass companies and i always say no the reason i dug deeper on you is because i've interviewed a lot of the founders that you've worked with and i know some of their sales motions and they're sometimes unique or different so if you're sort of the whisperer for this kind of thing i said you know what we're gonna have richard on so thanks for coming on i appreciate it man like i i know i'm not probably your normal guest so thank you so much i really am flattered to be here so when do you usually get involved with sas companies and can you talk maybe about gain sight like how early do you get involved typically insight is a really fun story i'll give you the short version i had one client in austin it was my first client i was using a yahoo email address i'm flying back from austin my first week i sit down on the plane next to this guy literally in suede shoes and jeans and a blazer and it's nick made it from game site this is 11 years ago 12 years nah eight years ago nine years ago and they had 15 employees right he and i had this amazing conversation we got shushed by the flight attendant twice um and we were sober we weren't drinking at all we were just having a good time and you know you know the biggest mistake i made in that deal is i should have taken options but uh that's so that is an instance where i got in really early to build 2011 right um say that again nathan when did you start with game site 2011 yeah i think so right around the time they were founded right so no it's probably 2013 because i've been doing this nine years-ish so it was right after i started doing this okay great and what did it look like i mean how did nick engage you was it a retainer were you actually a full-time employee what it looked like no it was it was a retainer engagement for about 30 days um where i came in and really built out the process and trained the whole team they they really got the concept early of that everybody sells even the accounting department right like how you treat your vendors matters um and the content i teach is very tactical so if i'm teaching i don't want to get into a pitch but if i'm teaching certain tactical things it always becomes relevant no matter the role sales sdr customer success got it and so what did nick pay you for that 30-day trial i'm sorry what did nick pay you for that 30-day trial back in 2013. what did they pay me yeah uh a healthy five figures okay healthy figure so does it stop or do people continue working with you typically yeah no it's a great question it's very different now particularly because of cobin cobit it used to be the traditional show up do a day of training maybe one or two coaching sessions because of cobit we shifted to a five-week training and reinforcement model um i'm conscious of sounding pitchy so please stop me nathan so uh where we spend the first week doing two hours a day four days in a row so like monday through thursday we do two hours which allows for micro learning greater greater reinforcement greater retention and then for the next four weeks i do once a week meetings with both the managers and then once a week meetings with the sales team so that it now is a much different engagement with gainsight it was totally different because they wanted me on site listening to calls you know it was a completely different game uh you know they were my second client like you know thank you so much to nick for you know taking a shot on the guy with the yahoo email address of the day so um so that's what it looks like now because now it's it's always been but now i've built out the reinforcement piece and so what is that monthly cost now you know during code what are customers paying you on average uh or for something like that it's around 18 give or take 800 a month yeah for the five weeks and so and and i don't charge by the hour and i don't charge by the head so like if you got a you know if you've got a team of 20 i'm gonna it's the same as if you've got a team of ten yeah right and are these all sas teams or you go across industries it's mostly sas it's not all some of the fortune companies are different right um you know google was google cloud so it was like their aws service so kinda sass but kind of not right uh visa was literally their you know their corporate cards right how do they go and sell a corporate card to delta airlines or you know those kinds of places so uh it but 90 of my clients are sas related and how many clients are you working with today uh i usually take on about two to three per month um i can capacity more because the way i revamp the program they're shorter days and i don't have to travel um anything more than about five clients in a month those a lot at least for me i can do more i just you know at some point you know i don't need to grind that hard yeah yeah but it's a five-point startup right like i'm not trying to go public i'm not trying to do those things i've built a really nice healthy business that's more than a lifestyle business but um you know i love the fact that i'm home for my kids every day and all those kinds of things so five sort of five coaching clients at any time sort of paying you know call it two brand per month again that's a great business right uh for yourself you're doing a lot about leadership too now you've done this since 2013 um obviously your model changed over time there's a lot of folks in this space you know my first sales book was neil rackham spin selling back in the day uh and there's a lot of new sales that's coming out all the time have you put out sort of any books like tell me more about what meat means well yeah thank you for asking i'm in the process of writing it you know i have been for about two years and i got lazy about it but now i'm actually committed to it there's a great service out there that i found that really guides you through like nine steps in a box yeah kind of yeah i mean it is not kind of it is about book in the box and so i need that leverage i need that piece because otherwise i'll just get distracted so i'm a i'm super open about things i'm very focused on mental health and i have adhd so if i don't have uh parameters around me make some things a little bit harder yeah let's talk uh about gainsight because again nick has come on many times right so last time he was on the show uh was back in late 2019 he talked about flirting with a 70 million dollar run rate he talked about 700 customers they'd obviously raised and they've raised a bunch of money but his team size was 700 and i asked him how many quota carrying sales reps do you have and he said 22 and i also then looked up what the past reps were on linkedin in other words ones that were at the inside now are not against anymore there were 36 so there's a lot of sort of churn in the sales team the annual quota target he told me was eight hundred thousand dollars for those quota carrying reps right down this system for me where do you think it scales where does it break should other people copy this yeah so i think that the answer to that is everything's an experiment the first two years in sales right there is no here's the playbook for everybody right because you have to figure out what product market fit you don't have product market fit or 10 or 20 customers i just learned this yesterday from the vc in austin um and and i really thought it was interesting is that at 20 customers you got a baseline you got to get to 50 to really decide if you've got the right market fit and he was talking in a very specific niche so that you know obviously there's a little bit of difference there so what i think the key piece is bringing on that closer first you need to bring in the closer who knows how to do it without the process being built that's the question you're asking me and yeah you do want a sales process but not super early on not with your first second or third rep maybe by the time you get to your second or third you start to figure out what your first process is and even then i call it a process hypothesis because it's gonna change i can assure you that what nick put together uh way back when when i was there we talked about creating the stages is probably very different than what it is now and as an early stage founder and even a mid-stage or even nick you should be looking to break it what do we what what do we need to do and the key thing that i'm always trying to encourage companies to do is break it so that the experience is better for your customers right going back to your customers and saying hey you're a great customer you came through our process what do we mess up in the process what have we done better what did we not deliver soon enough to you um and so that's the first thing the second thing is um is you need to you need to understand when you're going to go after enterprise what that means right enterprise is not sdr teams and stuff like that you've got to understand how they choose to evaluate something how they evaluate it what procurement looks like what security infosec looks like it's a whole other enterprise world so richard answered the question that was a lot of answers to so when you joined gainesville was founded in 2012 so you joined in 2013 which was about a year in what was the size of the team at that point you remember i mean it was it was 15 people in the company and how many sales reps i want to say there was one to two sales reps plus nick and nick learning how to sell at that stage so this is a big question should founders do the first million dollars of sales themselves or should the founder bring in the first sales yeah one thousand percent founders need to do the first part of sales um i don't know if it needs to be a number like a million like it depends on sort of what the you know they need to do it so they can understand the motion at the at the early stage right at the pre-series a or series a level so founders absolutely have to do it what founders also have to do is they got to realize that their reps are never going to be able to close at their ratio in most cases because they're the founder they walk into the room and nathan's like this is the founder i've got rapport with nick if something breaks i'm calling nick yeah right like that's the whole thing and so many founders and ceos forget that piece and particularly technical founders technical founders who aren't used to carrying a bag and carrying quota they feel pressures in different ways but it's but it's not the same and they forget this that that that they're buying the founder as much as they're buying the service yeah okay that makes good sense now when um does that first sales hire always get promoted to essentially the head of sales the vp of sales no i don't think you should um let me rephrase that i don't think that's what you're looking for you're looking for the first sales person who wants to come in you need to give them good equity not you know bogus you know here's a thousand shares or ten thousand shares you need to give that that first rep equity and you do need to have the conversation with them about do you want to be in leadership do you want to be in management but it's certainly never a promise right what i do tell people to do is hire the aspirational rep hire the you know the director of sales who doesn't mind going down and building right taking a step back and being a rep but also has a chip on their shoulder to get promoted to go and hire the vp of sales and i see this all the time if i go see people hire vps of sales from places like oracle or some other big company as their first rep the biggest challenge the biggest reason they don't work out they haven't actually built something from the bottom up they haven't built the process from the bottom up they've never built a sales playbook and a sales screen like it's been so long since they've been in the trenches that that's what that's often what i see happen so i want you to go find the person and give them the shot they deserve because their current company has bought into some you know i don't know if i can curse but they bought into some false belief system that oh we need a title we need a pedigree so got it for sas companies exclusively what acv is too low to have an inside sales rep on it there's not enough margin to pay commission well if you define inside sales as an sdr someone that's making that has a quota target is making a commission well so sdr appointment center is different than an inside sales rep look i can you know i would easily hire inside sales over outside sales any day of the week i've always been in inside sales i've never been a a windshield warrior and i thought it was wait wait sorry yeah yeah the question is there's a price point that is too low to put human touch on it whether it's an sdr an ae or whatever whatever you want to call it yeah i think it's my guess is it's in that less than 399 a month range right or 3.99 a year might be the right people it really just depends right like how would you make that work if you're selling it someone's listening right now and they're trying to learn from you and they sell price when it's 500 bucks per year how can they put touch on that and have it be profitable with the sales ratio so that to me so i don't swim in this pond right a lot of clients i don't have these clients my guess is that's a self-serve model whatever that product or service that's my question right so how high does a price point need to be where it's not a self-serve model they can make the non-self-serve model work uh i think it's got to be i think it's got to be a couple hundred bucks a month it's got to get to 2500 a year for it to be worthy of some level of touch and there's a difference between certain levels of touch versus you know a closing role um i also think too that if it's a technical product right um then you know those technical people don't really want to talk to sales people in general so you know it depends on what you're building devops motion yeah talk to can you name it sas company you're working with today yeah i can name several of them uh i worked with achievers in the last year i've worked with the company called force therapeutics all of this quarter which is doing some cool stuff in the medical field i've worked with um working with uh jfrog i'm working with a couple other you know i mean there's more but i focusing on jfrog for a second one of the major um valuation drivers of sas at scale is their ability to drive net revenue retention above 131 40 which means there has to be a motion drive expansion revenue if i'm paying you to coach me are you telling me to have my account executives manage expansion after the sale or is that the csm rep ah i'm going to defer to nick on that question [Laughter] it's it's whoever is comfortable doing it right and where their strength is there are plenty of customer success people who don't want to grow revenue and sell and that's okay part of the challenge with customer success is they've been fault of been fed a false belief system that sales is bad right so that's the first narrative you've got to get over it also depends on where you want your team going after net new business you're going to have some 80's or graded net new business you're going to have some who are account managers and that's what i've seen in the last couple of years you have eight you go after a net new you have account managers who focus on growth and expansion and then you even have customer success which is a little bit more about onboarding right so like as we've seen the sales motion keeps getting specialized now you have to be a certain level and a certain uh type of expense to have that account manager between sales and customer success because you also don't want to make your experience for your customer bad either with like who the hell am i supposed to talk to yeah last question here on driving that expansion revenue regardless of which you know function group is responsible for driving it are you doing a group quota and a group target or individual quotas just like the initial sales rep i think it's both i think there's there's value in supporting each other um and getting away from that old school i'm not going to share my practices with you and i think there's value in giving an individual quota so that people can feel something i'm looking for your opinion though based on the data set you have i know there's value in both but i i want do you have you must have a did you have a strong opinion here yeah my strong opinion is both like so how would you structure it if there's a team listening right now that has 30 sales or that's the 30 account managers that are in charge of driving expansion revenue how would you structure individual quotas plus group quota tied to expansion targets yeah so i think you have to look at it by roll away so customer success might get a smaller individual piece and a bigger team piece whereas the account manager might get a bigger individual piece and a smaller team piece right i also i also think that this is that part where and i don't think people do it nearly enough is that there should always be a smidge of equity into this goal right like the more you give back to your team and they feel like they have ownership of the organization the longer they're going to stay which is a whole other issue we haven't talked about in terms of retention yeah i mean so is it a good or bad thing that nick has churned through 36 sales reps i think it's fine and in this many years yeah are you kidding that's actually low right statistically i see about one in three reps actually making it on a regular basis so i don't think that that's bad at all yeah all right good stuff richard let's wrap up here at the famous five number one favorite business book favorite business book um lately has been um green lights by matthew mcconaughey number two is there a ceo you're following or studying uh not really i because and the reason is because i'm writing something i'm very conscious of what i absorb these days and because i want to make sure that i write something that's authentic and don't accidentally borrow something number three what's your favorite online tool for building uh your consulting business for building my consulting business um has probably been instapage lately number four how many hours of sleep do you get every night eight nine and what's your situation married single kids married two kids uh 12 and 11. and how are you i'm 52. 52 last question what's something you wish you knew when you were 20. to shut the up and listen to people like take advice i was i was an old school gen x i was a gen xer who always thought i knew what was going to happen and how to do it which sounds very millennial-ish but gen x was worse at it because because we were latch key kids we were forced to figure it out on our own which is a different belief system than millennials who have access to data that i didn't have guys earth harris consulting group lost in 2013 their second customer was gain site they got into gain site when the company is only doing 100 grand 200 grand a year in revenue helped nick sell help his fursuit sales rep sell today he works with anywhere between four and five customers per month the customers pay caught two grand per month he does caught 10 grand a month in consulting revenue against servicing these spaces consulting on everything related to the sales motion especially in sas things that that uh that expansion revenue target should be more of a group deal on the csm side more of an individual deal on the am side it's a trend it's a hot topic right now we'll see what happens but richard thanks for taking us to the top nathan thank you so much for being here i appreciate it for having me on sorry i'm used to doing my podcast but thank you thanks one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 pm 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 sas world whether it's an acquisition a big 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 sas 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 up for that at nathan laca dot com forward slash slack in the 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