Tales from Sales

Matt: My name is Matt Althauser, and I'm the Chief Revenue Officer at Amplitude. That really just means that I lead the go-to-market team, so sales, marketing and customer success.

Suzanne: I checked you out, knowing that we were going to be having this conversation. You're a sales professional. You were with Optimizely for a few years, you were head of sales there. You built up their European sales division. It's like you know this business.

Matt: I'm learning this business. I think all of us still are. It's pretty early days in SaaS still, and B2B SaaS in general. But, yeah, we're getting a lot of learnings and it's pretty fun along the way.

Suzanne: So, I consult a lot of software companies, and the biggest challenge for any software company and the biggest desire is growth. Everyone wants to get those customers and grow those customers. I think there is a lot of tension between, should I build up a sales team, is that even the right thing for me to do versus content market strategies or influencer marketing or other sort of acquisition methods that don't really involve human bodies.

**Suzanne:**What are your thoughts on the necessity for sales teams in SaaS? When should you think about building them?

Matt: Yeah, I think it really comes back to who your target customer is and who you're building for. We see this a lot where you have a founder who is very product centric, which is amazing. That's, I think, what you want at the end of the day. Then what they're trying to do, is they're trying to distribute that product in a way that doesn't actually fit the customer or the size of the contract that they are actually going after. That usually drives a lot of it.

When I first joined Optimizely, it was interesting, the product at the time was completely self served. They had launched a product in October of 2010, and I joined in June of 2011. So, it was really just a six or seven person company at the time. It was interesting, because the first goal when I got there was to prove that they needed salespeople. That process was really, really interesting. At the end of the day we found a great way forward but it’s about understanding who you're going after and the offering that you’re trying to build for that customer.

Suzanne: There's a sound byte that's been shared. I can't remember if it was Brian from Airbnb who says, "Don't hire for any job that you don't already do yourself," which I think is good advice for startups in the context of, you have to kind of go through the process and learn it.

Matt: Yeah.

Suzanne: And, so, I'm curious, especially given the experience you share with Optimizely. They had a self-serve model. They knew that they had language and kind of a funnel that got people there. Did you have to kind of figure out the script and the offer? How much work was there in going from a self-serve model that's working to creating a sales plan that works? Matt: Yeah, I mean, it was really about finding a repeatability for us … from some early wins, so Dan and Pete, founders of Optimizely, like a lot of founders, were doing everything at the time.

So, when I came in, they had had a few ... they actually had some early consulting gigs where they knew that they could kind of get a higher price point, but it was the repeatability that I was really coming in to demonstrate. There was a little bit of a framework there. We really tried to just productize that and make that something that we, as a company, felt comfortable filling on in a repeated fashion and actually had the team to do.

So, yeah, we came in and I think we started seeing, with 2,000 bucks a month, could we get any company out there to pay that amount of money. Then we started calling in to a bunch of different companies and cold calling in, saying, "Hey, is this a price point that you would pay for Optimizely with these services for a twelve month agreement." Slowly, we started to build that. Within pretty short order, that revenue started to become the bulk of the company's revenue. So, there was a market league different price point. We had the self-serve product. You could start at $19, $79, or $399. Then we were coming in at a $2,000 price point.

It was interesting, but you saw early on, how it would really start to catch on.

Suzanne: How does one go about building out that sales process, right? So, if I'm hire number one, kind of like you were, there's no precedent, there's no template, there's no here's how we do it. Your job is to figure out how to create that repeatable sales process. Can you just, like, talk us through a little bit of the ingredients that go into that?

Matt: Yeah, well, sales is a numbers game. Like a lot of things out there. Again, it goes back to that target customer.

First thing, what we did back then, we actually found a database of digital analytics professionals. There was about 2,000 folks in there that we could reach out to. We really just started, or I should say, we actually had this little phone booth in the office. I locked myself in there for about two months and we made about 1300 cold calls in that time period. Through that process, it's basically a lot like the process for the product manager, where they're interviewing a bunch of people and eventually coming out with a repeatable product. Same sort of concept with sales, you need a big swath of interviews, because you are probably only going to convert one to two percent of those people into contracts.

Within about ninety days, we had actually closed enough business to pay back my contract for the year. That's when we knew. That's sort of the kernel, and what you do with that is, you have an overall sale and you say, you know, it took us 100 phone calls or whatever it might be to get into a meeting and from that we got ten meetings, and from that we got one contract or whatever it might be. Then you can actually start parsing the different jobs to be done within that framework. So, now it’s very common that people have SDR's. So they really are getting those meetings. Then you have the account executives that run the second half of the process. From there you start building a bit more complexity in your sales process.

Suzanne: Alright, so 1,300 cold calls. I'm sure you're well aware there is a very healthy dialogue right now about are cold calls dead, or are cold calls not dead. What's your personal take on it?

Matt: I actually was picking up the phone and calling them. I don't think that it's dead. It’s a part of an outbound process. What you want to do if you are going after new accounts in a cold "outbound fashion," meaning they haven't come inbound to you, what you want to do, is you want to construct a cadence or a follow-up methodology, so that you might reach out with an e-mail first or they call first. Whatever makes sense to what you are trying to accomplish. Then it’s really about the follow-up after that. Most salespeople don't follow up after the third try. But what we see is that it's really around the sixth or seventh try when you really start seeing success and touch point throughout that process.

So, it's more about running people through a consistent outbound process whatever that might be. If that's calling in, emailing, a bunch of different things. I think the biggest thing in all of it, is as a salesperson, you really have to do your homework, and be convicted that you are really going to be helping that customer that you’re reaching out to.

Suzanne: So, when is it time for salesperson number two.

Matt: It's tough, because salesperson number two can actually come very quickly. Especially, if you subscribe to the idea of focus. So, what we did, was we actually brought on Julio, who was the first hire that we needed there. He's now gone on to have a very successful sales career, which is awesome. He actually came in as an intern to do that SDR work and grew super fast. So, again, its how many jobs do you need to accomplish to get the output you want.

If you have a ton of outbound calls that need to happen and you are doing bunch of demos at the same time, that is really two different work streams. Separating those sooner than later is a good thing.

The other thing that can be a driver of it, is really the contract value that you're selling at. If you're able to get, probably say the magic number is around 20,000 dollars a year, if you're under that, it’s pretty hard to justify outbound human selling. If you're over that, roughly it would make sense for you in the long run. This is really big rough rule of thumb, I don't know what people’s margins on their products are and things like that. But when you really bake in the cost of sale and commissions and all that stuff, you kinda want to be north of that number there.

Suzanne: Yes, cautionary tale, listeners. Don't take Matt's exact answers here, and then come back and blame us for "how come my sales plan didn't work?"

There's another expression, which is "Don't build what you can make, build what you can sell." We talk a lot about this in my product class. The challenge of creating a valuable product. I mean, that's at the core of product management, and again, a lot of where that tension shows up, is somebody built something that maybe never should have been built to begin with. Then they hire a guy like you to go and sell it. Then it’s not saleable. It;s not saleable in its current form, so you do what you do well, which is you make the sale. You promise the customer X, you promise the customer Y, and then you come back. So given that that's the reality of what it takes to get the sale done sometimes, what would you say to product managers, kind of in reverse, about how to make your ... ‘cause then they are made at you. They’re like,“Why did you promise them that, we don't have the resources for that feature.” How do you start to repair that tension between those teams?

Matt: There are two phases to this. There's initial product-market fit. Then I think something that enough people don't actually talk about, is once you have product-market fit, and things are actually going well, how do I roll out additional products on top of what I've already done. So there are sort of two phases there.

The first one, this is tough, but at the end of the day, an early salesperson's job, is to bring meetings to the company for feedback on sales and sales process. That's really the job of that first salesperson. We actually had a ton of meetings early on where we would still involve the founders. It wasn't that I was going out and selling by myself. At the time I barely knew what JavaScript was. Before that, I had a company just do mattress recycling, so I was an expert in this space by no means at all. So, bringing in Dan and Pete, at the time, to sort of be our sales engineer, and really taking the sales across the line and talking more about that visionary alignment with the prospect, that ultimately is what helped us early on in those deals.

Once you kind of have that repeatability and both parties, sales and product, feel comfortable that, “Hey we've got something repeatable here, we feel good about it,” then it's in the interest of the company to hold the sales team accountable to specific outcomes based on metrics that you determine together. This is really early sales, but at the end of the day, good salespeople know that they need to get contracts across the line to keep their jobs and be helpful to the company. So, that's a healthy tension actually. So, that's the first one, that's just getting things off the ground.

The second phase, which I talked about was around, “okay, now we got this thing going.” If you know SaaS at least, what's really important is that you provide more value to customers over time. What's really tough is that you run into these situations with the product organization, what they want to do is get feedback from existing customers over and over again. There is this interesting tension, because the go to market team is saying, "wait, wait, wait, we need to kind of sell to them more things over time. We can't be doing customer development all the time, all the time with all of our customers."

The way that we've approached that, and the way a lot of company's approach this as they start to perfect that balance between the two teams, and actually just then the VP of Product over at our company, and Sondia, who leads product marketing. They really spearheaded this and done a great job. They create the different phases for the roll out of a product. We make those very public to the entire company. It starts at alpha and this is really just where product and engineering, or story telling and getting involved in prototyping with some limited resources from customer success to maybe get people in a super early alpha phase trial of the product.

Once we get out of that phase, we run into this beta phase. That's where we are actually identifying a few customers and running a beta process with them. We're not discussing specifics of what we're rolling out from what it would cost, and all that stuff. We're still learning.

Then from there we go into a release phase. That's when we train the sales team, get them up to speed and really start thinking about how we will price this new feature or product.

Then, finally, we actually get into launch. That's where marketing comes in, and we can push that forward. You can see, just to solve this seemingly simple tension, you really have to drive a lot of clarity between the organizations when you are at scale. It's important to really think through, how I am being thoughtful about rolling these products out, and how am I enabling the different teams across the company to find success within that new product or product space.

Suzanne: Yeah, I mean that's such a fantastic insight. I think what I heard from that early stage piece is the product team, and maybe the product team is the founders in that case, or its very, very close. The product team just has to be really, really okay with accepting that the market is there to say, "this is what you need." So, if you got too much ego around what is the product, you're probably going to fail right there, because you're not listening to what the customers are saying in order to make it valuable.

This point that you made about product managers always wanting to do customer development and sales, sort of being like, "no, no, no." Can you talk more about that? What is the threat or the danger, in your opinion, of that too much customer development?

Matt: It's not a danger. There is nothing better than product teams wanting to engage with customers and learn from them. It's more around competing interests. So, often times if we get our best customers into a beta or alpha stage, we feel it's a part of giving them that product that they've helped us build. Whereas in sales, you're like, "Okay, we have to grow these accounts over time, so how do we find that balance."

Suzanne: Right, okay, so I think what I am hearing is, recognize that some customers make better candidates for that customer development process, and others are like, they haven't realized full value yet, so let's be careful how much we're mining them for value.

Matt: The other thing that's actually the more important thing, is that you don't want your best clients to always see you making the sausage. It’s kind of a crazy image in your head, but if you think about the sausage making process, that's pretty ugly. What you want is to just present a finished product to the customers. Especially, your most key customers.

So, sometimes that's another risk. I've seen that also at my previous company where we were doing customer development. People saw the stuff we were working on, it wasn't aligned with where they wanted us to go as a company, and then they thought more about potentially churning off of the product. You actually introduce risk into these relationships that its not intentional by either party, but it can sometimes be perceived that way.

Suzanne: What is the motivation, typically, for customers to be involved. Especially if you are thinking about enterprise clients. This comes up when we talk about being lean in the enterprise. It's always challenging, because MVP becomes a harder and harder concept to get buy-in for. When I'm an enterprise client, what's my motivation in saying, "yeah, let’s definitely be part of your alpha. Yeah, let's definitely try a bunch of new features." Why do I want that?

Matt: Well, we talk a lot about one of our core operating principles at Amplitude is solving customer pain. As long as you are abiding by that general concept, then you're really solving pain and adding value to that customer. Most of the times we find that they're super excited to get involved.

Why exactly do they do that? Well, in our case, we're they're product analytics platform. The more they can understand their users and products, the better they can do as a business, so we are very aligned with them there. The more that they align with these analyses or future capabilities that they want to get done, then they can participate, give us feedback and have that capability with their customers over time. I think it's about really solving customer pain and being very, very aligned with what that specific account wants to accomplish, and then only making sure they're involved in those betas versus other betas or alphas that we might have cooking.

Suzanne: Yeah, I love that answer. In fact, it reminds me of a great salesperson that I knew who talked about going back to the cold calling piece. Generally, the fear around reaching out to clients and then saying, "I don't worry about that, because I know I have something valuable for this person, and my job is just to help them see that." It sounds like it's a little bit of a similar thing, where it's my job to just make your circumstances better, and so everything that I'm doing is really in service of that kind of mission.

Matt: Well, that's the best part about SaaS in general, is that you get judged as a go-to-market team or as a company and a product team every time that customer is up for renewal. They can vote. They can either renew and continue to say, "yes! you are providing value to our business," or they can churn at that point and leave and say, "nope, you guys didn't cut it." I think there's a lot of power to the customer in that world.

Suzanne: Cool. So, tell our listeners, what is Amplitude. Is it a new company, is it not a new company? Where are you at in the life cycle?

Matt: So, Amplitude was founded by two MIT grads, Spenser and Curtis. They've been phenomenal. They've just been really good leaders. Really, the company started out of two founders doing something completely different. Actually it started with a mobile app called Sonalight. They're in Y Combinator. It was a voice recognition application, so that people could talk to their phone while they were driving without getting hurt. This was really pre Siri, so they started building this, and they launched it, and they saw this initial uptake from press, but then they didn't see customers sticking around. So, they started building analytics to try to understand, how can we retain our users? How can we understand their user behavior? Then they started looking at the cohort of folks in their YC group and all of them were having similar problems. So, they really started to focus in on, not the application, but the infrastructure to support the application, and started building what we know today as Amplitude.

So, the product was really launched in 2014. And, yeah, we've been off to the races since then. It's been really successful. We've got thousands of companies that are using the platform. There's a free version and then a paid enterprise version. We now have about 100 people in the company and we just closed our series C this spring.

Suzanne: So, there are so many analytics platforms. I'm sure you're well aware of your competitive landscape, and I'm curious just to go back to the founders and that problem solving moment, why they felt that there wasn't already a solution that could give them the data that they were looking for?

Matt: Our company has a really firm belief that demographic information is just not enough. It's really about understanding user behavior. That platform did not exist at the time. It's really about, really at the end of the day, understanding what we call behavioral cohorts. Behavioral cohorts is grouping people, not based on which marketing campaign they came from. A lot of companies are out there doing that today. You can go and get people analytics, bunch of different companies out there.

What we're focused on, is once a user is actually acquired and actively participating within the product, that's the behavior we want to understand, so we're really focused on that. If you think about a world in 2005, where you had very linear websites, because people would come to the website and fill something out, and then they would get something in the mail a few weeks later. It was very typical marketing plan.

Now today, you have a completely different setup with digital products. You have people coming into a mobile application or a SaaS application, and being able to go any which way. That complexity really needs a different type of analytics platform to support it. We actually even have customers that do virtual reality with our platform, so.

Suzanne: Alright, well just to put you on the spot a little bit here. What you are describing sounds a lot like what Mixpanel offers to folks, so help me to understand. Why would I choose Amplitude instead of Mixpanel?

Matt: Yeah, so first thing, we are always a fan of doing any type of analytics out there. I don't talk a lot about competitors. It's not something that I'm excited about. For us, it really comes back to that behavioral capability around really understanding user behavior and being able to group users into what they've done, not necessarily just who they are. We feel that we have the platform in the entire space that is the easiest to use and the most advanced. That is why a lot of people come to Amplitude.

Yeah, but at the end of the day, if you're able to use any sort of analytics to better understand user behavior, that's a good one.

Suzanne: Well, that's very noble answer. You're saying, "just use analytics, that's my first concern, and then, if you want, choose Amplitude."

Matt: Yeah. Exactly.

Suzanne: Alright, take me through this. Let’s just create a mock use case here. I've got a SaaS platform, you know, it’s been in market for one or two years. We've got some folks that are using it, and we've never integrated a tool like Amplitude before. I hear this podcast, I'm like, “this Matt guy sounds like a good guy, I want to give this tool a try.” So, then what happens? What are the sort of basic steps that I'm taking. I don't mean the actual buttons that I click, but how do I get up and running with Amplitude, and start realizing the value from that?

Matt: So, we have a self-serve free product that you can try out anytime you want at amplitude.com. So, go ahead, try it out. You would integrate it very similarly to other products on the market. Like at Google Analytics, you just go through, tag your site with the different things you want to track and you’re up and running.

Suzanne: Suzanne: Cool. You guys are here. You're sponsoring INDUSTRY, you've got a really cool booth upstairs. In fact, we're gonna get some mimoSaaS very shortly, I understand. You also have this incredible, it’s called the Product Playbook or the Retention Playbook. It's like 300 pages of amazing information for product teams. That you give away. Where do people get it?

Matt: Productanalyticsplaybook.com. It's only 155 pages. You should maybe think about sales. Nah.

Suzanne: But, I'm seeing it from the, you know, this is the era of everybody doing an ebook and then the ebook is three pages long. This is like proper research went into this. It's a really quality output. Give us the highlights of, you know, it’s called Retention ...

Matt: Yup.

Suzanne: What about retention? What's your perspective on it, or the perspective of Amplitude? Obviously we know retention is important.

Matt: Yeah, retention is the most important metric for a lot of products that no product teams are probably thinking about enough. So, there's a few parts of retention.

The first, is just defining and understanding what it means to your product. There is different intervals that you want to be measuring based on the type of product you might have. If you're a SaaS product, you might not care if someone comes back every single day and reengages with your product, but you might care a lot if they perform a specific action within the last month. Being clear about what those things are, is really helpful to driving alignment between different teams and different goals for your product organization.

This book is all about helping people identify the tactical inputs to developing a broader strategy towards making a better product at the end of the day.

Suzanne: Yeah, I'm excited. I'm taking mine home. Alright Matt, just a couple questions for you. We do a segment on the show called, Get the Job, Learn the Job, Love the Job. Typically, it's product managers offering advice to product managers, but given that you’ve got all of this expertise in the sales side, I'd love to skew it a little bit and ask you, first and foremost, what advice can you offer to product teams for creating better relationships with sales?

Matt: I'm very, very lucky to work with Justin. He's our VP of product. He's phenomenal. What we try to do between gutter market and product is share metrics. I mean that by sharing ownership of metrics, and really forcing that collaboration and alignment. So, his product metric, his most important metric that he's driving towards, is weekly active courier within or platform. He actually has a goal to drive that up within a given quarter.

Now in B to B, he's depending on us to bring in new customers, but we're depending on him to engage our existing customers and really drive that number up. The reason he chose that number actually, was more go to market driven. That number has a very, very high correlation score with people renewing and upselling within our product, so we are very aligned there. We're also very aligned with the customer., because the customer, if you think about, we're an analytics platform, they're asking more questions, getting more value out of the platform. It's this great triangle of alignment between product, the customer, and go-to-market. We actually even, down to the customer success team, help drive that number up for them as well.

Suzanne: Okay. Shared metrics, shared understanding, shared coffee, and pizza probably.

Matt: Everything, share it all.

Suzanne: Share it all.

Matt: Just not the germs.

Suzanne: For sure. Alright, what about the reverse side of that? Where have you seen, either within the sales team or within the relationships between sales and product, what are the common pitfalls that people can potentially avoid based on your expert advice here today?

Matt: I think one of the biggest, biggest things for a companies at scale, when you are launching new products or extensions or whatever it might be to your existing platform, be very, very thoughtful about building product for the same buyer. I can't really stress this enough, but what we see, is oftentimes a company will get into a space. They say, "okay, we're in the marketing space." Marketing now today, there's mobile marketers, there's web marketers, there's all types of marketers. You can imagine that all types of those personas have different budgets, they buy differently, they think differently about product. At least, unless you're going to launch a full new product. The product line is completely separate than anything else, and you have a full go to market team to support that, it's very hard for go-to-market teams to support, in quick fashion, if you start changing who that person is that they need to talk to within an organization.

Suzanne: So don't forget about who your actual customer is.

Matt: Target customer, I can't say it enough. Alignment between go-to-market and product on who you're building for, and who you are selling to, and ultimately who you are making more successful. That is the most important thing that can drive that alignment and clarity between the teams.

Suzanne: You said earlier in our conversation, that before you joined the team at Optimizely, some number of years ago, you were coming from a completely different industry. Now you have been in this SaaS world for seven or eight years, something like that, so obviously you like it.

Matt: Yeah.

Suzanne: What is it about digital products or internet products that gets you so excited?

Matt: Well, my brother is a product manager at Amazon. So, we talk about it alot to each other. What I love about this space, right now, is that it's wide open. You can build something tomorrow that is better than a product that has been around for twenty years. You can completely upend a space for an industry in a matter of years. That's really, really interesting.

That pace of change is great from being the David, but it's also exciting for the Goliaths out there, because they know they have to innovate as well. So, everyone is pushing to figure out, how can we build better products? What's interesting is that everyone might be competing from a company perspective, but the real beneficiary is the consumers. They are, through this immense competition and spaced, they're getting better and better products and services throughout.

It's good for everyone, and as we push each other to build better and better things, customers are happier and happier along the way.

Suzanne: I love it. Matt Althauser, the company is Amplitude Analytics. Where do we find it online?

Matt: Amplitude.com

Suzanne: Amplitude.com, check it out. Great platform. Thanks so much for being part of our show.

Matt: Awesome. Thanks, Suzanne.