As a veteran tech executive at companies like Hewlett-Packard, Opsware, and Parametric Technology Corporation, Mark Cranney has spent most of his career in enterprise sales. Now, as a partner at Andreessen Horowitz, Cranney uses his vast experience to advise sales teams on how best to work with product and development teams.
In our second Product Management Confessions interview, Cranney talks about the common problems that early-stage startups face in selling to enterprises and finding product market fit.
- A good sales team sees the big potential to create value “at the risk of getting fired"
- Some companies shy away from selling in some difficult verticals (government, financial services) when they should be working with the product team to build out the requirements - “It’s hard but it’s worth it”
- How to hire the right sales people with the right profile for where the company is
- Why “land and expand” sales deals require a team effort
Watch the final interview here: Andreessen Horowitz’s Mark Cranney: Key Advice for Sales and Product Teams
Missed Part 1? Check it out now: Mark Cranney of Andreessen Horowitz: 4 Ways to Create Value as a Sales Leader
Mark Cranney: When we finally closed the first multi-million dollar deal, I was actually threatened to be fired if I didn't get off that account. Kept working on it. It was a make or break.
Matt Pasienski: You closed that one and then the rest of their competitors in the market…
Mark Cranney: Yeah, then over time a lot closed that gap between what the product had and what it didn't. We had kind of service organization that I had control of, but pulling the product guys in and saying, "Look, we need to get this type of features, and functions and flexibility into the product to go take down this whole market. It expands the size of your markets and your picture exponentially. It takes that one lighthouse win, and then all the other ones became customers over the next few years.
Matt Pasienski: I think that's such clear example of a sales team going in, like you said, creating value by understanding this very complex problem within ...
Mark Cranney: At the risk of getting fired, so ...
Matt Pasienski: ... Clearly, it worked out very well, though. I think taking those types of risk is the mark of someone who really understands what's at stake. I think that's what a lot of young product companies don't understand is that if you have a sales team who puts that amount of time in, who sees the big potential, understands the problem and then brings that to the product team and brings the product team onboard. There's a much bigger potential than if you just go out and put a little website up and say, "Hey, buy it if you like it."
Mark Cranney: I actually see a lot of our companies, as well as other start-ups here in the Valley, they shy away from certain verticals because they think they're hard. Case and point, the government vertical. Oh my gosh, it's hard to go to sell to the government. The sales process is very long. It's a completely different requirements, particularly around security. Financial services is another one that they might shy away from because they're big. They have a lot of legacy issues, more sophisticated buyers. They'll stay away from them, in a lot of cases, too long, in my opinion.
It's really having that depth and knowledge about a particular vertical. You can go hire. You can go hire that type of knowledge. People that walk the halls and know how to get this type of things done. Going into those harder verticals earlier on can yield benefits for the rest of your verticals or markets as well. To pull your product folks in there and say, "Yeah, it's hard but it's worth it." The Federal Government is the largest IT buyer on the planet. Being able to knock those requirements down are going to help you with a lot of other verticals as well.
Matt Pasienski: What's the difference between someone who has done it before, and I'm talking specifically about selling into the very difficult companies but with a big payoff, what's the difference between those who's done it before and someone who wants to do it but hasn't quite seen it work? How do they behave differently? What's the value giving in going and finding someone experienced for your company to bring them in and say let's do this.
Mark Cranney: From a recruiting standpoint?
Matt Pasienski: Yeah. If you recruit, then what's the payoff?
Mark Cranney: It really is time-to-market. I have this conversation quite frequently with our founder COs, particularly, the first times. They come and ask, "All right, I need to go hire that sales. I need to get going on sales. I'm still maybe in that product-market fit type range. I'm working on those first five to ten customers." It comes down to, I said, "Look, you got three options. You can go hire an individual contributor. That might turn into two, or three, or five or ten of those individual contributors, but you, The Fonder slash, a lot of cases, Technical CEO is still the VP of Sales".
The downside to that is, you're going to end up with three, or five, or ten different ways of doing things, and there will be a lot of dead bodies along the way. The second place you can go do is, go find somebody that's done it in scale. They might not have created the playbook, the costume playbook or the process and the the recruiting profiles and things of that nature, but they then they're first or second-line type manager. They done it. They know how it should be done. Maybe they'll scale up to be the one that scales you up. Maybe you'll have to peel them back.
The third option is go hire somebody that's been there done it. They have a playbook. They put custom playbooks together. That's the real VP of Sales. You got to able to recruit them as well. I may typically say B or C is what I'd recommend, unless you have a real second or third time… they can go manage. Because it's different managing engineering, managing product management versus managing the sales animal.
Matt Pasienski: Right. It's a whole different beast.
Mark Cranney: A lot of times, particularly if you're doing a top/down type model that's a little harder to sale, it requires early executive involvement, maybe integration. Things of that nature. You're going to have to put outside direct people on the field versus today's world everybody wants that bottoms-up type model, but the product has to cooperate. Do I have something that users can could download and it's easy to use.
Matt Pasienski: Yeah, you want to be slack. That seems very easy, but that's a rare kind of thing.
Mark Cranney: Even a slack, right? You can go land an account. Are you going to be able to expand without putting the sales and the customer-service type resources in place to go get that upsell and cross-sell and to fight off the legacy competition you're going to have from the bigger players as well as fight off other start-ups that you're competing for? Your product people are going to have to cooperate or you're going to go build in that enterprise functionality that a CIO or a CSO are going to sign off on.
Matt Pasienski: It takes a long break. It might take six or eight months to get in all the people-management and things that you're going to have to contend with to get to five-hundred people.
Mark Cranney: If I pull you, my product management guy or gal, in by the ear and I rub your nose in it a little bit and say, "Look, this is, it's important to this company that we go do ... add this enterprise type functionality to go expand that business, and to be able to go into other companies in that vertical.
Matt Pasienski: I want to focus on that before we finish. You say you bring the product manager, show him really what's ...
Mark Cranney: Rub it in usually.
Matt Pasienski: ... You actually rub their face ... I'm imagining you actually grabbing the product manager and actually rubbing his face.
Mark Cranney: I have. I've had one over my head before, spun him around.
Matt Pasienski: …
Mark Cranney: He's across the street now.
Matt Pasienski: Aside from some suplexes, what are the ways to really get the attention of product as a sales team and show them the opportunity. Because sometimes it's a one big account. Sometimes it's a whole market and it might be a single feature that products is just fighting you on, but there's fifty customers who immediately upsell or buy if you had that feature.
Mark Cranney: Again, I go back to what I originally said the maturity and the how much intellectual horsepower the sales guy has because if the sales VP is not having an impact and providing that feedback back into product development in a closed loop type process, that's his issue or her issue that they to address. If doing this functionality, putting everything in the old PRD process. In the old days it was a lot easier, in my opinion, because you have the waterfall and you're only releasing ...
Matt Pasienski: Every three years, two years.
Mark Cranney: ... Well, one or twice a year in the perpetual world. Today in the sales development world, you can move things a lot quicker. You might not need a professional service organization. Sometimes not having that professional service organization, actually filling in gaps in the product in the field and those gaps becoming ... those custom gaps becoming baked in the product.
I think a lot of the bottoms-up companies have come out with a great user type product are missing that. Pulling product management out into the field, getting them engaged in not only the sales cycle but the cycle, and having them understand all that's required to go land that account and then expand in it.
Going back to the 'it's great to make the users happy', but to go get those other departments in a company, we're going to have to build this type of functionality. Maybe it's collaboration. Maybe it's security. Maybe it's a global company and we're a … company, and we got to do scalability and architecture type things to the product that are going to allow us to expand. If we don't, all we're just go continue to land but behind us we're putting our self at a competitive rift for somebody to come in and wipe us back out.
Matt Pasienski: Because you maybe have closed one department but there's six other ones, and if you sell those at six more revenue...
Mark Cranney: You know where the best place to sell something is?
Matt Pasienski: ... Where you've already sold.
Mark Cranney: Where you've already sold something.