How SalesQualia CEO Scott Sambucci grew SalesQualia to $2.6M revenue and 35 customers in 2024.

hello everyone my guest today is scott sambucci he is the sales coach for b2b tech startups he's an author speaker podcaster an ultra marathoner he was the first head of sales at blend and has over 20 years experience in silicon valley with three b2b startups a unicorn and exit and one's still going scott you're ready to take the top let's do it man all right which one's still going uh still going to altos research say that a little slower altos research halo joe's okay very good yep so you spun off i guess this new business and now is this new business coaching or is it also b2b sas play uh it is a coaching company today we actually think of ourselves more of a co as a content media company we happen to make money by coaching most of what we do is content production and distribution uh people pay us for that content and that help day today through coaching right now and when did you get into this what did you launch uh i started the business about 10 years ago actually all the way back when i was at altos research i started off just doing workshops i'd written a book uh that led to workshops i did a workshop at the lean startup conference way back in like 2013 and that led to the next thing and the next thing inside gigs and so i was running this as a side gig for about five years and then in 2015 uh stepped away from blend and made this my full-time work interesting okay so 2015 full-time and at that point when you went on it full time like what had it done i'm curious how big you grew it as your side focus so in 2014 what was your total revenue do you remember 2014 revenue the business was probably like 50k just between workshops side gigs speaking uh those sorts of things i was also doing some teaching as an adjunct professor at an international university so it was just a way for me to kind of bridge the gap and pay the bills in that first year to step step away from the full-time work to making this my my life's work so what gave you that confidence i mean it was only doing 50 k's a site maybe not only i mean that's actually an impressive side project but it sounds like you were doing something in a full-time business what give you the confidence to step away and jump in and bet on yourself uh i don't know if it was i think confidence was that i'd been you know three b2b startups and had successfully gotten them all from zero basically zero revenue the first couple of million um i knew what i was doing in teaching workshops was working for clients i knew that the clients we worked on inside was working and it was also a personal decision and that my wife at the time was working on her phd i had a two-year-old son at home i was commuting through hours or two and a half hours each way to san francisco on the train to go work at blend and that was a good week because i was actually home the the bad weeks were when i had to travel to dallas and chicago and dc to do implementation so uh i was about 40 at the time and it just got to the point of my life where i'm like you know what i think i've had enough of the startup fun and i wanted to be home and this is an opportunity that i built as a foundation that i could jump into i knew it was going to be hard that first year or two to kind of make the transition and make it self-sustaining but i had i was pretty clear that i knew there was demand and that the niche i was focusing on was one that i could serve quite well did you at least get some equity in blend yes there you go okay it makes it so bad as i say so it's tough yeah we're doing fine because uh yeah i mean they just raised again on like a 3.3 billion so um i mean at the time i didn't i mean of course i didn't know for sure what that was going to mean but yeah i mean we have here we have some chairs when you when you exited did you already know you had that in your back pocket was the valuation track of blend already clear that your stock was gonna be worth something as a backup plan it was pretty clear when i left it was just as we're raising a series c and we had uh successfully implemented at about four or five large banks and lending partners so the trajectory was there uh there's and there's still a lot of work to be done but i mean the reason i started i joined blind was because of the founding team there i knew them they were actually customers of mine when i was at altos research so i knew them personally and they came out of palantir they knew their stuff and i just knew like if i if i could help grow this this team uh out of the earliest stage i was employed 13. it was like 12 engineers in me no wow so my feeling was like if i can help them get off the ground and contribute at that capacity for a couple years um then somebody else is probably going to take it from you know 3 to 10 million and somebody else from 10 to 30 and so on yeah so i was pretty confident going in that something was going to work out and when i was leaving you know the rocket ship was really starting to take off so 2015 you're now all in on the new business it's sort of a blend of coaching plus maybe you've productized some of that just to be clear is there real code behind what you're doing now or are you that still to come still to come the code our code base is the content that we have in our library that we use as part of our delivery of the coaching that we do yep so who's we what's the team look like today uh so the core team we have a head of operations amy we have a head implementation coach named matt and he works with our clients more of as a project manager giving them sales advice based on the frameworks we teach and then we have a couple of coaches that we that we bring in to teach in very specified areas um so we have jason bay who is actually has his own company bloodstone prospecting he teaches on prospecting and outbound we have megan mishyack who teaches on pipeline and deal conversion uh so those are that's kind of our core team as some admins as well so how many people is that total full time uh full well full time there's six including me we have two regular coaches that we bring in that are doing coaching calls every week with our clients and then there's sort of a perimeter outside of that where we bring in additional experts based on topics that our clients are in need of so we'll look at what the clients need the client needs are if it's something like sales forecasting and territory then we have somebody who we know that knows that topic really well and we'll have them come in and coach and teach so one of the things that i learned early on in the business is that um if you let ego drive the business then it's going to stunt its growth meaning that i can't know all the answers even just going to linkedin today you can see so many good experts in different areas and so one of the learnings we had after the first couple of years just realizing this is that transition from being just a coaching company it's got like the scott show where i'm teaching everything and instead thinking about well what a real job is it's it's to solve the matching problem it's a matching problem a founder has question needs to build a system who's the right where's the right place to get that answer and that translation has actually really helped us grow okay let's play that game real quick we'll call it founder has sales question for scott okay so first question you're making your first sales hire internal it's an str it's your first quoted carrying rep do you hire one to start or do you hire two so that you can compare the performance yeah i mean we usually recommend hiring two when you're setting your quota for those first two sales hires is it okay if it's only a three to one ratio of full on target earnings to quota or do you really want to start a five to one ratio i don't know i think the answer is depends it depends on the situation i had this conversation yesterday with a founder and the the challenge that they had is like they're producing certain numbers and they think well if i get an sdr will they be able to do the same production chances are probably not not at least not initially it's going to take some ramp time so if you start setting quotas based on what you want versus what's possible then you're going to get an sdr that's discouraged so we actually think about comping quotas uh as a more uh fluid uh conversation to have with your team especially in that first year or two you know it's like hey this is your program for now these are your goals for now we're going to use that information over the next three to six months to kind of bootstrap the next model that we're going to build for you a lot of sas founders are just not sure if their good emotions should include quota carrying reps at all and a lot of that's tied to price point and is their margin in the price point to pay out a commission what's the minimum acv that these b2b stats companies need to be selling at to say okay yes we can start to afford to put touch on these sales and have a sales rep with quota yeah i mean we usually talk about 10k a year like a thousand a month kind of as a benchmark because that's that's where you're you're gonna have some multiple calls with at least a couple decision makers in an organization so there needs to be some real meat to the sales process it's not just like go to a web page click to sign up because the middle one is the best plan type of thing there's going to be some real decisions that need to be made so and that also allows you to have a pipeline manage that pipeline to get like a three to one pipeline coverage ratio that allows you to kind of manage your conversion rates and then what is that what does that ratio mean the pipeline coverage ratio what i mean oh it just means that uh the number of deals you have in your active pipeline relative to your conversion rate so let's say i have an acv at 10k and i've got 10 deals in the pipeline that's a hundred thousand dollars a pipeline if my conversion rate on the back end is 30 or 33 that means have i know that about a third of those are going to convert so i have a three to one pipeline coverage it's actually a big mistake a lot of founders make they think they need a big pipeline but their pipeline coverage or their conversion rate is really low they're maybe only converting 10 or 12 percent of their total pipeline because they've done a really poor job of qualifying those those deals or they've just done a really poor job of actually converting them so now they're trying to manage nine out of 10 deals that are actually never going to convert they just don't know which the 9 out of the ten are so they have to actually work all ten in order to get the one and because their time is the biggest opportunity cost that they have we actually think about well how do you actually get a slimmer smaller pipeline so it's like three to one or two and a half to one so that you're only focusing on those deals that are the right the ones that have a higher chance of converting and then you see this qualification oh yeah it's a really common mistake and i think even investors put gas in the fire because you're going into say an a round funding or even a b round and what do the investors say they look at your numbers but they also say like show me the big healthy pipeline what they think is a they think big means healthy big actually can be very unhealthy and the founders end up chasing that to go oh we need a big pipeline and the reps say oh i'm just putting stuff in the pipeline we had a long conversation with us with andy paul and this and so you end up actually mismanaging the activity that the rep should be doing who is andy paul uh he runs a podcast of his own and he's over at uh sorry sorry i'm not allowed to curse oh you're good you're good that's okay i'm just curious i don't know who i don't know that is so i don't know if my audience will either but you can tell us later um okay interesting so general general lesson is there is focus on smaller pipeline and a higher conversion rate from pipeline to actual deal close that's a mistake you see a lot of people fall into totally yeah interesting what are some other things like that things that you know people are making mistakes on but i maybe don't even ask about uh most people don't know how to qualify leads or how to do proper discovery and so i think that again this is where you get rushed into a vanity metric of things like well how many demos are we booking how many how many calls are we having and demos are not always the best indicator that's more of a vanity metric in your sales pipeline so you know even on websites it's like hey click here to request a demo and founder say well somebody requested them i have to give them a demo and our perspective is no they actually have to earn the demo they have to deserve the demo like if you're going to spend an hour somebody's showing the product how do we know they're the right person are they is there urgency are they just clicking around and so a lot of the work we do to help with that pipeline coverage is insert a really specific lead qualification customer discovery system so that you're filtering out the bad leads or the later leads earlier so you can only so that gives you the time to focus on the real deals that have a chance of converting in the next six to 12 months i was on clubhouse earlier there was a european sas founder with 5 million bucks in are saying i want to expand to the united states and the way we're going to do that is to hire an outsourced sdr firm to help us scale up this outsourced team so that we don't have fixed expense on our bat on our profit and loss statement yet have you seen outsourced sdr teams work for this sort of thing international expansion yeah i think it can i think you can if you have a baseline of success if you know your icp if you know the messaging that tends to work pretty well in one market you can transfer that you're gonna have to calibrate it a little bit and change it a bit um i think the mistake in outsourcing is i don't have any leads and i don't have any customers and i don't have time to do the sjr work so i'm going to outsource that's just shoveling your problems off on somebody else so outsourcing i think should be used strategically to either test markets or to use that as a stepping stone to prove that you can move into say a new geography or a new vertical is this something you'd ever build would you ever build an army of strs that people could hire like via you that you've trained no i feel like it's pretty commoditized i mean there's people that do it better or worse than others uh but that's not it's not a to me that's not a business that's interesting to me building systems building process helping teams scale that's a lot more interesting yeah very cool okay so you've got folks on this full-time 2015 how many customers are you now working with today uh we work with 35 active customers right now that's great and is it typically just a retainer yeah so we have a monthly fee we have a 12-month commitment to start in most cases and then after that people pay about two to three k a month depending on the team size what's the 12-month commitment if someone's listening right now going i love the scott guy he's answering nathan's questions great he's giving me things to think about i want to work with this guy what's like the minimum for the 12 months usually what do you mean the minimum the minimum investment yeah like are you saying okay 2k per month time so it's 20. yeah got it and you want the year-long commitment so you can have time to sort of put systems in place etc yeah it's a filter for us to know who's looking for jack and the beanstalk versus people who are committed to building out a process it's like you know any any change you want to make you know if you've been like a seed stage company or an around company really been struggling to get some repeatability you know it's it's just like the outsourcing example you just explained right you can't just like i'm going to outsource and all my problems are going to be solved sometimes we get some really quick wins fast but to build repeatability and eventually scalability it does take time so we want to know that people are looking at this at the long view as opposed to us being the emergency room and they're helping us hoping we're gonna get them off of life support yep 35 customers two grand a month that will put you at a minimum about 70 grand a month right now on revenue but you're probably over that i would imagine past the million dollar run rate yeah we're we're we are we are past that on a future run rate yes that's great yeah last month's revenue times 12. yeah we're well beyond that we've been growing uh last year was actually a really strong year for us especially q4 uh q1 has been already super good uh i think a lot of that is a combination of market function of course the external market but i think we're also getting really good having done this now for five years um it takes it takes a while to get the flywheel going yourself getting the right team the right people the right process you know what's it look like though i mean where can you give me a sensor growth like december of 2019 what was your looking around right then uh forward run rate was just under a million got it okay got it uh that was back a year ago okay wait so what are you at now we are well we don't disclose specifically you don't have to disclose no i'm getting i am curious though yeah so we we think about and we teach the star clients as well we think about the rule of three and ten i don't know if you've come across this before um there's a good article on sequoia capital that phil living wrote from evernote he learned this from hiroshima toni the founder of rakatan this idea of growing by orders of three and ten are kind of your big jump so going from say 300k in revenue to a million in revenue there's a big jump and when you make that jump all your systems all your process all your people tend to break uh when you get to a million then they jump to three you need new systems new process new skills go from three million to ten million so these are kind of the jumps that we look at and we're kind of on that path ourselves uh just like we are teaching our clients to do that so we're we're past that million dollars our next big jump is to get to three and we think we'll be able to do that pretty quickly now this year you think uh i i think we could if we push really hard but i don't want to jeopardize taking shortcuts to do that i'm in no rush to do it i mean the business is doing well the margins are good we have the right team in place we have we have the best clients we've ever had so um i'm not in a position where like a lot of sas founders where i have to go to a certain rate in order to close the next round when you're boo you bootstrap this right i mean it's it's something i've felt self-funded yeah i mean this is great it's a casual business for you you have blend stock that you learn back on you get to meet great new founders are you doing angel investing when you find a founder you like uh we've thought about that um what i've what i've looked at is just number one it's it's a business in itself number two it's it's highly erratic uh even the best measure funds are doing anywhere from 15 to 30 return on investment um which i'm like i could do better than that on my own just doing a cash flow business as we had a crypto guy on the call he's got secret investment his he's on he's long on bitcoin and games gamestop exactly and silver yeah so i mean when you look at the the total returns relative to the the expertise like that's not our expertise our expertise is teaching people and i also think there's a misaligned incentives when you're investing as a portfolio because you're sort of like assuming 80 or 90 of your investments are going to fail and you're kind of like okay with that whereas if you have every client that's paying you you're on the hook to help them get results every single month and so we feel like there's a higher level of accountability when they're paying us because we have to deliver we can't trigger our shoulders and say oh well sorry your business didn't work out yeah yeah i think tough on you but we still made a ton of money this year that's right that's right well hey congrats on the girl scott let's wrap up with the famous five number one favorite business book right now it's atomic habits by james clear number two is there a ceo you're following or studying patrick campbell number three what's your favorite online tool for building the business uh the easy default one is linkedin right now number four how many hours of sleep you get every night at least i get seven during the week nine on the weekends plus snaps that's great okay and what's your situation i think married kids right 15 years married and a nine-year-old son soon to be nine-year-old son who was his birthday is on our wedding anniversary oh max it makes it efficient all the celebration is in one shot right that's right all right and how are you i'm 46 to 47 this year 46 last question what's something you wish you when you were 20 uh take experience over dollars guys there we have it sales qualia.com launched full-time early back in 2015 with a side project before then but it's only doing about 50 grand a month when he went in full time after leaving blend and some other b2b sas comings where he cut his teeth now working with 35 sas companies helping them to manage and grow their pipeline each company pays them somewhere between two and three k per month they've broken a million dollar run rate hoping to hit that three million dollar run right here shortly as he looks to scale but again great business bootstrapped small team moving quick scott thanks for taking us to the top i enjoyed it thanks david one 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