Victoria Treyger of Felicis joins Nate to discuss Why Most CRO Hires Don’t Work, Lessons from Scaling World Class PLG Companies, and the Case for Founder-Led Sales. In this episode we cover:
- Experience from Building World Class Sales Organizations
- When to Bring in a CRO or Outside Sales Leader
- New Data on Seed & Series A Startups Sales Hiring
- And more!
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0:16
Victoria Treyger joins us today from San Francisco. Victoria is a general partner and managing director at Felicis. Since joining fleeces four years ago, she has led investments in Dovetail, Hippo, Athena to name a few. Prior to joining the team at Felicis, she served as the Chief Revenue Officer for Kabbage, where she has scaled the business to over 100 million in revenue, and through the $850 million acquisition by American Express. Victoria, welcome to the show.
0:46
Great to be here. Nate.
0:48
Can you walk us through your background and your path of venture?
0:51
Absolutely. So prior to venture I was an operator focused on scaling businesses across SaaS, FinTech, a bit of consumer and really running the revenue functions, sales, marketing BD and had a great passion for for building out those teams and building revenue. So while I was in those roles, which included RingCentral, Kabbage, I started angel investing and advising a multiple startups and over a period of time had invested and about invested or advised a portfolio of about 17 companies. And when I took a step back, I realized how much I loved that opportunity to work across several sectors and guide founders through the different stages of growth. And so that is what eventually led me to venture actually a couple of the companies that I was advising were Felicis companies I independently knew Ayden, the founder of Felicis. We had kept in touch over the years. And so it was a very kind of smooth and natural transition from operating to venture.
2:11
We’ve been fortunate to have it and your other partner Niki on the show, but for those that are hearing about Felicis for the first time, can you share that thesis that polices?
2:20
Sure absolutely. So you know our thesis at Felicis is to find and invest in the platform and system of record companies that power key sectors and critical sectors of the future. We are a generalist fund we do invest across multiple sectors, or big sectors are FinTech, vertical and horizontal SAS security in front DevOps, health tech and b2b marketplaces. And we of course, have sort of sub thesis within these sectors where we’re focused. But the overall overarching approach is that we find the platform companies that will power each of those sectors. So for example, in FinTech where I spend a lot of time. Felicis is not going to invest in a specific new bank or a buy now pay later or lender instead Felicis is going to invest in the infra companies that are the backbone and have to be used by and leveraged by all of the companies in FinTech. So for example, in the early days, my partner Sandeep invested in plaid and then, when I was at Cabbage, we used had to use plaid for conductivity to banks. I invested in Sentilink and Alloy, Sentilink in the fraud space, Alloy, identity and transaction monitoring. And they’re both companies are going across the board. Their customers include banks and credit unions and fintechs small and large fintech. So that’s kind of our approach to investing at Felicis.
4:09
Got it. And you mentioned that you angel investor before, I’m curious how you’ve had to change your mindset or your investment muscle, if you will, investing through a platform like Felicis versus solely writing angel checks?
4:23
It’s different. There are a couple of really big differences. The first one, which is probably the aspect of venture that I also love the most is that LP perspective and responsibility. So at Felicis our LPs are institutions that tend to have very positive impact on the world, their universities, large hospital systems, foundations, children’s hospitals, and so I think a lot actually when we have incredible relationships with our LPs we I’ve spent time there, I’ve toured the hospitals. And when you become an institutional investor, you’re really thinking about every check and what is going to be the impact of that check, will this hospital system be able to add a new brain center that potentially came from some of the great returns that that you earn from your investments at Felicis? So that’s obviously something that is completely different than than being an angel investor. And then you also think a lot about the likelihood to return a portion of the fund or ideally, the fund when you’re making bets. So you’re spending a lot of time thinking about risk reward, and what is the potential return of this company to the fund? So those are a couple of the big differences. Have you had any big surprises since becoming an investor in the job itself, like, is there a part of the job that you’ve enjoyed more or less than you expected? I think the two areas that that I enjoy more than I expected. So one is the international reach of our companies. I have loved working across the globe, I’ve invested in a couple of companies in Australia, and it has been just incredible to get to know and see the boom in Australia’s tech ecosystem, which that happened during COVID. So that was new for me. And I really, really enjoyed it. The second piece would be the LP relationships, and really, sort of the power of what we are doing when we’re making investments and where where those returns go. In the end, I’ve really enjoyed thinking about that. And understanding the impact of the dollars, I was being an operator helped you move into the world of venture, I think, as an operator, you know that it’s never a straight line to building $100 million plus companies. And you know, that each step of the way, generally, from kind of one to five, over 10, over 50 million, those are all specific stages of the company, where you need different teams, you need different management approaches. And you also tend to hit walls, we see in particular, a lot of companies hit a wall around kind of 6 to 10 million where they need to, they may be grew too fast, tired, the wrong people, they need to kind of stop, rethink, refocus, and figure out how they’re going to get past that 10 million so and then keep growing to 20 and 50 and beyond. So as an operator, I think it’s very helpful, that I’ve hit those wells myself, and I don’t get freaked out about them at all. In fact, I think it’s a good thing. It’s designed that you’re growing, you’re big going from, you know, a toddler to a kid, to a teenager. And, and so I love that part of working with founders and helping them through those elements of when they hit the walls, I think you can really only do that if you have been an operator. And then the second piece that’s been helpful for me is that all startups over time have to start thinking about go to market. And so having the the the actual skill sets around the different sales motions, enterprise inside sales, PLG, channel, and then of course, marketing and partnerships, it’s been helpful that to actually break into venture and earn founders trust, because I’m able to make impact pretty quickly.
8:57
Yeah, help them navigate through those plateaus of growth.
9:01
Yeah.
9:02
I mean, you definitely have an abnormal amount of sales experience compared to most investors. And I’d be curious to pick your brain about some of them, specifically, one is founder sales. I would be very curious. Like, I think there are investors that are both sides of the table. But for you, why is founder led sales so important for an early stage company?
9:22
So I think that founder led sales is critical in the beginning. Because you’re figure you’re working hand in hand with your customers to get to product market fit, iron out the product, and get to the point where you can get to repeatability in the beginning. That connection with founders, between the founder and their customer is so critical, and the level of feedback that you’re getting about product is invaluable. And then that’s why I believe in the beginning, certainly at the seed stage all the way to a, it’s super helpful for the founder to still be leading sales at a minimum, at a minimum, the large deals on the enterprise side.
10:17
When is the right time for a founder to hand that off to someone else? Are there any leading indicators that you can pass along to founders in the audience? Or how would you advise founders when that time is?
10:29
Yeah, so I think that it is generally around the Series A where you’re ARR, somewhere between 1 to 2 million. But in addition to that, the important signals to look for or that you have ironed out, it’s to two big ones, you’ve ironed out a sales motion, and a customer target, that you know, works. And you can really hand that off to a head of sales generally not yet a CRO, I’ll come back to that point. This tends to happen in mid market deals. And I think it’s fantastic to start to hand that off. And then on the enterprise side, the same thing, I just think it happens a little bit more slowly, I think about on the enterprise side selling to a lot of the large banks in the Fortune 500s, where the reality is, is that buyer will still want to spend time with the founder. So they’re the handoff is going to be a little bit slower, because it’s still important for the founder to be involved. But when they do bring in their head of sales at that a stage, I have found that it’s more helpful for it to be kind of a director slash VP of sales, the head of sales, and not yet a CRO. I don’t think companies are generally ready for a CRO until they’re further along.
12:04
Got it. Well, that is a perfect segue to where I was going to go nuts. When is the right time to hire CRO?
12:10
Okay, well, it’s funny. So we’ve done a little bit. So I’ll give you my input. But I’m going to start in my experience. But I’m going to actually start with a little bit of research. So we have an incredible operating partner at Felicis. Her name is Michelle Delcambre, who was previously Global Head of people at Stripe and before that Atlassian. So she did some research, which she published recently on this very important question, because we see so much churn in that sales leadership function. So we wanted to actually look at the numbers and see what the data shows. So I’m going to read these to you. Her research was across dozens of private, privately held and public companies, and then we’ll come back to the conclusion. So point number one 100% of companies who had a C level sales executive before the series B replaced that executive with a more seasoned C level, or president by Series C. So isn’t that an incredible statistic? 1%. Yeah. So you know, that gets to my earlier point, it’s not a great idea to hire a CRO before your before the series B, we’ll come back to why in a little bit. Point number two 0% of the series B sales leaders, were still the head of the function by IPO or Series E. And then research point number three 90% of Series C sales leaders. So now we’re getting into later stage companies were replaced or leveled before the IPO, and that’s looking at 21 publicly traded companies. And so let’s talk about why you know, at the earlier stages, the reality is that the sales leader that gets you to 5 million, even 10 million is a very different sales leader than a true CRO, who’s going to scale you from 10 million to 50. And then a different CRO that’s going to go usually from 50 to 100 to 200 million. The function of a real CRM is twofold. It’s number one to drive repeatability of the sales motion, where you can actually truly forecast and you know what numbers you’re going to hit. And the way that you do that is with an sales enablement, with training with coaching with very tight management of activity levels and number of calls being made conversion how people that your leads are moving through the pipeline. And that’s just a, it’s a heavily operational skill set. And it’s not the skill set of going from zero to 2 million in ARR. So that’s a big reason in the second is that true CROs also have more than one sales motion. So in addition to traditional sales, that they’ll generally also have bring in partnership or channel sales. And companies just aren’t ready to start that yet at the seed and a stages. So that’s why we don’t generally recommend bringing in a CRO before the series B. But the ideal time is kind of around Series C. And certainly when you’re kind of past 5 million arr. And you’re looking more, how am I going to go from 10 to 50? And how am I going to build the systems that that are really going to allow me to scale?
16:00
Got it. So let’s say you have a founder who is hiring their first CRO, post? Yes, be they’re hiring their first CRO, if you could give a couple pieces of advice called two or three pieces of advice to the founder that is in charge of hiring that CRO? What do you tell them? What are some of the characteristics they should be looking for in this candidate? What are some pieces of advice on hiring specifically for that stage of growth?
16:26
Oh, my gosh, that’s a great question, I would look for three things first. And this is might be controversial, but it’s my personal approach. And that is that the CRO, is financially oriented. He or she has a deep appreciation of an experience working with sales ops, or revenue ops, and they truly understand numbers, because when you get get figured out the product, you figure out the customer, you start scaling the business, the numbers of actually how you are managing your pipeline, and all aspects of the sales process become critically important. So that’s for some of the best sales leaders that I’ve hired for worked with, they actually may have come through the revenue ops function at some point or sales ops function at some one point in their career. So that’s the first part. The second part is I would ask them, to show you how they train their team and how they manage performance. So what do they do when a rep hasn’t hit quota for two to three months? What what is their system to improve performance? And get the team back on track? That’s the second one. And then the third piece is I would look at what is their very specific scaling experience? So did they go from sort of five to 7 million? Or did they achieve the kind of growth that you’re looking at, which is probably at least a 2x year growth? And sort of how did they do that? What systems did they implement, to be able to do that and to manage process consistently. And by the way, if we talk about, you know, plg is a completely different animal. And in plg, even even more than in traditional sales motions, you want somebody who has very, very deep, they tend to be much more operationally focused in their background in general, the top CROs and sales leaders are those that are strong operationally and working across multiple teams. I’d love to pick your brain more on PLGA felices has backed a number of amazing plg companies Canva being one of them, which we were talking about prior to the call. Yeah, we’re diving into some of the nuances here. First, how does a founder know if a product lead strategy is even correct for their particular type of business? I’d love to hear. Sure. Use that for some we’ll dive in from there. Okay. Yeah. Felice has actually led notion which is one of the very first TLG companies and then later Canva, and then more recently, dovetail and kind and multiple other companies. So I would as a founder, I would ask the question, can your end user start testing the product and get value from the product right away? Or does the product require a sort of big system implementation before an end users can start using it so kind of double click Getting on it a little bit further, your company is not a good fit for plg. If you are selling to sort of a defined set of buyers, for example, your audience is the CIO or the seaso at the fortune 2000. That’s, that’s not a plg motion. But if you if the product is one that can be adopted and used by users on their own, and then it starts to grow virally, and then it starts to get used across teams. That’s, that’s a good product for plg. Obviously, sort of the first company, one of the first companies really built this wave was Dropbox and then we’ve had many others come after. Yep. Do you find that these companies our product lead from day one? Or what is?
20:57
Yeah, I’m curious from your learnings, what do you find there?
21:00
Yeah, 100%, because it is so absolutely from day one, because it is so core to the way that the business is built. So I’ll take you know, our company, dovetail out of Australia, it’s fabric of the company, first of all, the founders came out of Atlassian, which obviously, is one another great example of product led growth. But every aspect of the dovetail product was from the very beginning, designed to make it as beautiful and easy to use for the end user, as it would be if it were a consumer product. So it has to be, it has to be that way for it to be product lead growth, because the whole idea of product lead growth is it’s so easy for the end user to use it that it operates almost like a consumer product. And so you have to build your product development, that and then the actual product build from Day Zero is one that is designed for those end users so that they can be self service, it’s, it would be much harder to go back and add plg later. Are there any common lessons that you’ve learned from product lead companies in the portfolio? Absolutely. So you know, one of the things that happens with GE companies is that as they scale and they grow, they do start to close enterprise deals. And all they all do over time. And they start dealing with enterprise customers. And the legal teams, in particular, of those of those enterprise customers, the way that it happens is very organic, right? It’s coming from your users, and keep spreading the product usage keeps growing across teams. And then you get to a point where you start interacting with the central buyer at those companies. And at that point, the buyer starts asking you these questions around security, compliance, data, privacy, legal contracts. And so a lot of plg companies will sort of get stuck for a bit while they figure out Whoa, you know, how do we serve these enterprise customers across all of these different questions? Do we can we try to automate this as much as possible? Well, how do we go through sock two and all of those aspects to be compliant for serving enterprise customers? And so I would recommend that that companies look at some of the legal and privacy centers that have been developed by companies like Splunk. I think Splunk did a really good job. Most recently, if you look at dovetail and you go to their their privacy and their their legal center, you’ll see it’s incredibly thoughtful and well laid out. It starts with the actual terms, their MSA, acceptable use policy, when then we get into privacy, then we get into all the different agreements and governance and so you have to actually take a little bit of a step back. And then it’s going to be like a couple months effort probably to sit down work with great legal teams to actually crank through all of this and build your legal and your privacy and your governance systems to be able to serve the enterprise customers. Otherwise, when you layer in the enterprise motion, it won’t be an efficient enterprise motion and the whole beauty of plg is that It tends to be an extremely efficient sales motion from the standpoint of your ratio of revenue versus what you’re spending on sales and marketing. Yeah, leads are essentially qualifying themselves. That’s right. That’s right. Yeah, they’re coming coming from your users.
25:19
Yeah, from an organizational standpoint, when the enterprise sales start to get layered in, does that induce any other complexities from just a organizational standpoint and the way teams are either managed or structured. And the reason I say that is, because if you’re a product lead company, or if you have a value, or if you have a metered service, your product team is aligned with engineering, which is also aligned with sales, everyone is trying to drive more adoption of the product to you know, increase revenue. But when you have, or when you layer in your sales lead motion, I can imagine that some of these enterprises have very specific wants or needs. And I’m curious if you find that that puts any sort of strain on the business from an organizational standpoint, or in If so, I guess, how do you help coach founders through that and prepare for that? Either I think that some of the strain points that I have seen have been around the marketing function, and what is the marketing function in an appeal G world, what is the role of marketing, I have found that it is best when companies are very strong at content and community. And where I have seen sort of friction happen is when they start spending a lot on paid marketing. And it doesn’t work to either build awareness or or drive leads. So that’s probably one of the big Watch out areas. The other one is that customer success, and account management, those functions are super critical in appeal G motion, so it’s building them out early enough, because you really need to have them in place before and at the time that you’re building your enterprise sales capability, because they’re the ones who are nurturing the customers and helping them get to and helping to really grow the value of the accounts over time. So that’s one place where companies that will sometimes kind of go backwards and start adding that that customer success team where it’s better to have that in place right from the beginning.
27:36
Victoria, if we could feature anyone on the show, who should we interview? And what topic would you like to hear them speak about? I think that we should bring in a company that has been incredible at leveraging channel channel to actually reach customers. So I’m a big fan, in addition to plg. I’m also a big fan of b2b to see models, because I’m not a big fan of paid marketing with that with Google and Facebook. And so it’s really hard. It’s much easier said than done. It’s very hard to do B to B to C in a scalable way. And so I have two companies there that I am going to recommend that you bring in to talk about how they’ve done that because it’s the majority of the revenue and their sales motion, but I can’t tell you the names yet. That’s fair. Yeah.
28:40
Victoria, what do you know that you need to get better at?
28:43
Time management? I figured that one out. Let me know. Okay, I will. I will. Yeah, you please let me know too. It’s, I’m a work in progress. Yes.
28:56
And what is the best way for listeners to connect with you?
28:58
Just email Victoria@felicis.com.
29:01
Awesome. Well, Victoria, this was fantastic. Thanks for coming on the show.
29:05
Awesome. Thanks, Nate.
Transcribed by https://otter.ai
