Taking it back to the very beginning stages, Sean Henry goes into detail on the maturity of a sales motion for scaling companies. Sean is the CEO of Stord, a company based out of ATL that is building The Supply Chain Cloud for today's leading brands. Sean shares how focusing on gaining validation to collect data at an early stage as well as demonstrating curiosity and desire to listen throughout the process of building a sales motion was key in Stord’s initial growth. Learn more of his recommendations, including the Magic Number at Stord, in this episode of Pit Stops to Podium.
Take 20 minutes to listen and then head back to the races! 🏁🏆
Finding Your Evangelist
An evangelist is essentially a first customer who is willing to not only buy for what you do today but also buy for what you’re going to be doing in the future. For those very first customers, you don’t want to perfectly optimize everything within their sales, such as acquisition cost, lifetime value, or unit economics. The main goal for your first customers is getting the first proof in your data point.
Start by asking potential customers, “If we built this, would you use this?” and find the person that says yes as their answer. That will be the customer who will pay for your product.
Lastly, it’s important to not get too far ahead in the demands of early adopters. There are many reasons for adopting that are much different from the traditional masses.
Stepping Out Of Founder-Led Sales
Once your company begins to scale, it’s important to start hiring salespeople to lead your teams. Sean recommends hiring two sellers but still being able to have a voice in the sales process as a founder. Ask yourself, “Is this an individual point or is this a product?”, “Is this my value proposition?” Once you begin to see success with your sellers, then founders can step back and train, onboard them, and explain what the value proposition is.
Staying close to reps as a founder is integral because they’re going to help you optimize what ultimately comes next in the next phase of your business.
Making Money in the Mature Phase
When making money in the mature phase, it’s important to focus on the long-term, not the short-term. As you get to the later phases in a business, one of the most important factors in helping to raise capital, build repeatable motion, and forecasting growth is having a strong rep onboarding and rep success.
The magic number: What your sales and marketing spend the quarter divided by your sales bookings the next quarter burdened by your gross margins.
Connect With Sean:
- Connect on Linkedin: https://www.linkedin.com/in/shenry96/
- Engage with Stord: https://www.stord.com/, Shawn@stord.com
- Reach out to the STORD Team! If you’re in ATL, feel free to stop by!
Brendan: Hey everybody, welcome to Pit Stops to Podium, the RevPartners podcast where we talk to execs who competed and won, taking their companies from high growth to high scale. My name is Brendan Tolleson. I am the co-founder and CEO of RevPartners, and I'm excited to have with me today, Sean Henry for our latest episode. Welcome, Sean.
Sean: Yeah, Brendan, thank you so much for having me. It's great to join and chat a little bit about some of the different go to market motions we've seen. It's stored in our progression as a company.
Brendan: Exciting yeah, absolutely. And as Sean just mentioned, he is the CEO of Stord, which is one of those exciting companies in the Atlanta area. If you're not familiar, they just raised their series C. Shawn was about 75. Is that right?
Sean: Yep 75 in the series C.
Brendan: OK, great. And then they also were one of the, I guess, what five companies have identified as a potential unicorn in the Atlanta market. So there's a lot of exciting momentum. And so Sean, with that, who is stored and watch our audience know about you?
Sean: Yeah, it's a really good question. And we are in one of those industries and logistics and supply chain that is not as much thought of, but ultimately runs everything around us. So it's a fun industry to unpack and start to tell people about. So story empowers retailers and commerce brands to deliver their products faster, but also in a more optimized way than they're able to do on their own. And we do this by combining both an end to end logistics network across the United States of warehouses, fulfillment centers, trucks and last mile providers, and the full stack software to manage that logistics network into one cloud based and configurable cloud platform. That platform gives a company a prime like logistics network that they can use really pay as you go to scale up and scale down from a startup to enterprise scale and compete, compete on delivery standards, compete on costs in their supply chain and more. And at the end of the day, supply chain is a $200 billion industry in the US alone and over a $1.2 trillion global industry. And as consumers keep pushing the boundaries on how fast we want products, overall, supply chains only keep getting more and more complicated. So sports really excited to shepherd some of these retailers and e-commerce brands we work with and to a modern stack in their supply chain.
Brendan: Yeah, I going to say it's a really exciting space and based on what you just said, the very end, it's that whole concept. How do we partner with our companies to modernize? And so I love that. Well, Sean, before we get to our big idea, you tease a tease out a little bit earlier in terms of kind of the maturity and the motions, which is great. But before we do that, we have a tradition here at the Pit Sops to Podium and it's this It's understanding who our guest is outside of what they do from 9:00 to 5:00. I'm sure you're not 9:00 to 5:00 on the clock, but when you have time outside of running a business, what are some of the hobbies, interests or passions? So give us three that we should know about you.
Sean: Yeah all right. Hobbies, interests and passions. So first, I'm a huge car guy. I've been into anything and everything mechanical and breaking down and fixing things since I was a kid. Second, same thing applies on the electronics side. I got my start in business buying broken computers, cell phones, electronic parts on the internet, refurbishing, repairing, exporting them from the US and selling them in different countries. So building e-commerce websites to do so. And it's a passion of mine. And then lastly, I would just say family, I'm a triplet. Actually, I have to two sister my age and I live in Atlanta and a great family and great friends and so spent a lot of time with them whenever I can outside of work. And as you know, the start up life, it's not as much time as you'd ever want.
Brendan: Yeah, the I don't think we've had a guest yet that is a triplet. So you hold that distinction. So well done. I know you don't have much control over that, but it's a fun fact. Well, let's transition into the big idea. And so you mentioned a little about who Stord is, and I think that's a good way to of segue into this topic, which is really understanding the maturity of a sales motion. And so there are a natural progression evolution as you think about what you mentioned a startup to ultimately become a mature organization. And so let's talk specifically about the sales aspect of that and. The three areas that we want to talk about, let's start with that, that first customer, that that evangelist. Let's start there. And then we'll move through the progression.
Sean: Yeah, absolutely. So when I think about the first customer any company is trying to get, I say evangelists because it's ultimately looking for someone who's buying you for both what you do today, but also what you're going to do in the future and buying you for the problem you're setting out to solve as much as they are for the solution. Any startup is a very iterative journey down the path of really what is our exact position in the market, what is our exact solution for the mass market of customers? But for that very first customers, you're not trying to perfectly optimize everything about that sale. You're not trying to perfectly optimize the customer acquisition cost. You're not trying to optimize the lifetime value, even the contract structure or the unit economics. You may lose money on your first customer if you really go in and do all the analysis of all your time, your energy, your team, your product, your capability and more. That's not the point. The point is you're ultimately getting that first proof point in that first data point. If I go back to me and Jacob's store, we had multiple iterations as we were starting to launch and think about our model and how we could best impact this industry. And each of those iterations, the very first thing we did was try to start selling. We didn't wait for build, build, build, product, recruit team, get validation that this is the perfect idea in the market. We set out hard core validation. We called every customer we could. We called every. In our case warehouse, we could as well. And trying to say, would you use this if we built this? Would you use this? But so many people sit out and say, kind of, how do you get your first customer? The answer is you start asking that person who says, yes, I'll use this to pay for it. And what is it actually going to get you to buy it? And if I price this around here, is this actually valuable for you? And if it is, you'll find that customer who says Yes and they're saying Yes because they believe again in the problem and then you, as the entrepreneur, that you can solve it. But bottom line is it's not scalable, and one thing that some companies run into is you get so caught up on those first three, four or five, 10 plus evangelists and you go raise money off of it. You hire a sales team off of it, but you haven't actually thought about, how do I go from somebody who's buying me for kind of non-value based, non massively quantitative reasons, more just qualitative trust partnership and more to really the mainstream audience where they are going to press on value proposition. They are going to press on return, on investment, on risk, on product capabilities and more. But everything we've done at staud and in any entrepreneurial endeavor has always been, well, fast. Can you go find a customer that evangelist who identifies with your problem deeply and is willing to pay? And the one piece of advice I give is they might be an evangelist for a different reason than you think, and it's a different reason than your core value proposition for your core customer. And that might be OK. And that might be OK because they're still using your core product for the same reasons. But just be cautious of is this the right mainstream reason that they're buying from me as that first evangelist? Or is it the right reason to actually start signing them? And you go building products around them, building capabilities around them, scaling your business around them? And so the example in what I mean by that is we start calling our first customers. One of the first companies to adopt store was a public company out of China. And you don't think your first sale is going to be a public foreign entity, but to them, we're selling a distributed warehousing network across the US. The first step Jacob and I took was let's go call 500 warehouses cold, call the supply side of our market. And almost nobody said we wouldn't want to be part of that network. We wouldn't want to be part of that platform. And so then we did the hard part. Let's go find a customer who's willing to pay for it, not just the supply side of our marketplace. And so the value prop for that first brand from China was it's really hard to know what the US footprint I should run from my logistics should be. You guys can be my professional partner who can help me decide where should my nodes be? Should they be in New Jersey, Atlanta, Los angeles? I'm on different time zones. I need software to monitor it. I can't take a very phone paper, email based process like a legacy company using their supply chain in the United States can. So that was perfect for that early adopter. But some of those reasons weren't necessarily kind of the mass market of why and who we were building for overall. And so I think focus hard on finding that customer that is going to be an evangelist, going to trust you to the end as a brand at first customer is still a customer today, five years later and really values. The problem to figure out is that the exact problem the mass market needs and don't get too sucked in to just the demands of that early adopter because there are reasons for adopting our different than the masses, which which we'll get to in a minute.
Brendan: Yeah, like, I really like that. And you know, we had a previous podcast guest who talks about value market fit and then moving to product market fit. And it's really consistent what you just described. It's like, let's start with like, what's the value? Is there a need? And then that kind informs what is. Our product market, we have an idea, but at least let's figure out the value before we get into market fit, so let's talk about the next phase. So you've got an evangelist, or maybe it's a few to your point. So what's next?
Sean: Yeah so next. Not only do you really start scaling up the business and the operations, the product and more against them, because now you have customers to serve. But it really comes time to interview and interview, interview, interview customers, both prospects and those customers. Why did you buy and go through the five evangelists you found go through the three evangelists you found? Are those reasons consistent, but then go out to the market and find people who told you no and actually ask them, why did you tell me no? And what would you be looking for differently? And some of those enterprises and mid-sized businesses you told us, you know, the earliest on actually helped us refine our sales motion the most because we realized, oh, what we're selling is too big of a package for you. It's too comprehensive of an enterprise transformation. OK, how do we actually figure out a land and expand or a wedge and expand a version of this? So it's easy to consume value for us, so we can really rapidly build a sales cycle in a funnel around these customer segments? And so I think it's really diving deep on those reasons it's figuring out, especially from your losses. How can you use those to go to the masses now that you have the base of the evangelists to build around, then you start hiring salespeople. We had our first few customers. We got to a few thousand a year in revenue and he said, OK, we can keep going and keep going. But if we're going to make the scalable, let's go hire salespeople. And I always advise people, especially on your first hires. A lot of times it is beneficial to hire two Sellers, if you can for your first pod because it is a benefit. You don't know even what goals to set for that first seller. If you've only had these evangelical sales, you haven't had real or go to market success and sale. You don't know how to run marketing ads and get a customer against. You don't know the exact acquisition, cost or sales cycle and time, or necessarily all the value propositions they're going to press you on throughout there. You're evangelists might sign up after they hear a price, a problem, an idea. Your actual mainstream first adopters. Once you start selling. And it's not just a founder sale, you have other people selling, they're going to press you a lot harder than you were expecting on what is the return on investment? What is the value proposition? Who are your competitors and how do you slot against them? And that's where you really start to refine, refine your find, and you're going to lose a lot. But I always say that to hire those two Sellers at the same time and remain a seller yourself as the founder because it's the only way to really have multiple horses in the race and understand, OK, is this an individual data point or is this the product? Is this my value proposition? Is this my sales motion overall? And it's once you start to see some success with those first Sellers or two or three of, OK, I know that I can train them, I can onboard them. I can explain who we're going after, what our value proposition is, how they're going to buy it, how long it's going to take. And I can make this seller successful to go get the next one without me. That's really where you start to think about getting to that later and later and later sales motion. I would just caution everybody, though, that in my opinion, even still in that mid phase of your first Sellers, it's not about optimizing the perfect metrics, it's about ultimately moving fast, getting validation, getting success under the belt. Because the more success you have with those early sales, the more data points you have to optimize and learn from overall. And it really comes to that kind of third phase in my mind, which becomes the absolute, most, most complicated and why products and companies and services like yours exist because you have to increment really complex, go to market motion and keep more. But you use every data point you can in there, not only from the customers but from the reps, and lean in and learn from those sales reps. What challenges are they running into on a daily basis? Because it's easy to underestimate how different it is for them to sell than it is for you as the founder to go sell and so I'm going to talk to you, open up to you. Respect kind of that position in a slightly different way versus your first business development representative or County executive where that prospect on the other end, until they know you're an early stage startup or company, they just see you as another company selling to them, not as the founder or reaching out. So stay very close to those reps, because they're going to help you optimize ultimately what comes in the next phase.
Brendan: I love that. You know, I think there's a common thread that I'm hearing, which is it sounds like a natural curiosity and a desire to listen. And so that always informs how you build and the decisions that you make. So you talked about with the evangelist, it's understanding what their needs are. And then when even when you talked about moving into that second phase, it's still talking to those customers and understanding what the needs are to even talk about the reps. It's talking to them. And so it's, you know, those relationships and those interviews inform how you build which I, which I really appreciate. And you know, we had another guest actually earlier and they you're talking about. Sales perspective, there are really three fundamental questions that you have to answer that a rep wants to know is, who do I target? What do I say? How do I make money? And if you can't answer those three, then you haven't figured it out and you need to go back to the drawing board. And it sounds like you figure it out. So you kind discuss in that second phase, you move beyond the founder from a sales perspective, you have reps now and let's move into that more mature phase that you were just alluding to in that response.
Sean: Yeah, I think it's a great piece to bring up as you enter that mature phase, which is how do I make money? And that's why you have to say to the reps, because you're the founder, especially in the short term, I'd better not be what you care about if you're going out of business. You care about the long term, not the short term, but the rep. They care about the short term just as much as the long term, and it's important for them. And as you get to that late phase, there's a few things that I've found start to matter. I think the best thing I ever heard about raising venture capital is that what product market fit is meant to mean or even kind of go to market motion fit is meant to mean is that you have a machine. And when you put a quarter in one side, you can break your wheel and you're going to get a dollar out the other side or whatever the exactly that is based on the economics you're looking for as a business. If you're still assembling those parts, it's very hard to go. Ask someone to hand you a really big bag of quarters to feed that sales and marketing machine and a lot of dollars. But that's ultimately what venture capital is for. It's for eating your sales and marketing organization and feeding your engineering and R&D efforts that ultimately give you more product and capability in the market to go sell and to monetize and to scale with your customers. So as you get to that later phase, some of the things that I found mattered the most for us for raising capital, building repeatable motion and being able to forecast where we're going and do so in a high velocity way was first kind of rep onboarding and rep success. You want to understand, can I get that rep making money and successful? How long does it take them to make that first sale, but ultimately to pay back their salary was one of the important ones for us to learn early on, but then to pay back some reasonable ratio of investment and investing in a sales headcount. And what is the payback on them with a high threshold for return on investment? The second one was ultimately the most critical I found as you get to later and later is what we call it at Stord, the magic number, which is ultimately what your sales and marketing spend the quarter prior divided by your sales bookings the next quarter burdened by your gross margins. So you get to your true economics and I'm putting a dollar in last quarter. How many dollars am I getting out of the bottom line. Next quarter? And it's when you can find a really good balance of OK, even with a gross margin burdened sales, marketing spend and success ratio, I'm getting the x-coordinate over quarter or something like that. That's where you really start to see success and you start to see I need to accelerate this flywheel faster and faster and faster. And so what we've watched is not only does that kind of magic number, my kind of gut check on is my sales and marketing notion efficient. But also, how does that efficiency scale over time? How does my quarterly sales of bookings against my quarterly sales and marketing spend? Are they detaching that would be bad or are they staying together or inverting where you're actually getting more efficient? That would be really good. And so I think you really need to watch those things and understand, is this a machine that I feel more and more confidence to go put more and more quarters in, in more in because so many people get excited about raising venture capital. But I always try to remind people. It's ultimately who sign up for big goals because you have that machine there and you go crank it harder and harder.
Brendan: Yeah, it only amps up the responsibility and accountability. It's a great thing, and I well, I want to take a step back. The magic number was a great formula and I think we should have a whole podcast on the magic number because that's a great takeaway for me, and I'm sure our audience will appreciate that this has been super important for me. Shawn, just to understand how you think about the sales, maturity, motion and wide of your experience at stored, I think it was a really fantastic framework to think about that evangelist and getting out of a founder led approach, then ultimately creating that process and looking at the data and form. How what investments do you make in light of what you're seeing in the data and from a revenue perspective? So thank you for joining us. We really do appreciate it. Sean, what are some practical next steps that people can take to either engage with you and/or Stord
Sean: Yeah, absolutely. So I'm pretty easy to reach Sean at stord.com or very active on both Twitter and LinkedIn. Please, please, look me up. I would love to connect and don't hesitate to reach out to the Stord team. We are based out of Atlanta, and if you're in Texas, where you'll probably see someone with the Stord shirt walking around and would love to talk to you about essentially working at the Stord or partnering if you have a company that is in around supply chain and around e-commerce and more, so don't hesitate to reach out. The easiest is Sean@stord.com.
Brendan: All right, Sean, Thanks so much. I really do appreciate it.
Sean: Thank you, Brendan. Really appreciate you having me.