90% of Startups Fail: What $100m Sales Teams Do Differently with Ethan Schechter

Speaker A: I insist on collaboration and then I use competition as a motivating factor, especially the first group of people you're hiring very early on. You want people to really be there for like the long term success of the company. They understand equity. I do a lot of talking about what could this outcome look like for you from an equity standpoint? If you start talking to people about that, they should care way more about the general success of the company than they should individually in that early stage.

Speaker B: Hello everyone and welcome to Built Not Born, the the Startup Go to market podcast by Venture Guides. I'm Sage Nye and around here we believe that great companies are built not born, one smart decision at a time. Each week we take you through real conversations with founders, investors and go to market experts on what it really takes to land customers and scale your startup. Now let's get to work. Hello and welcome to Built Not Born. I'm Sage Nye, venture partner at Venture Guides. Today we are joined by a longtime friend of the Venture Guides family, uh, Ethan Schechter. Ethan is a seasoned go to market and sales leader known for his ability to scale high growth SaaS and developer tool businesses. From early stage to major enterprise organizations. Ethan is here to share the unique lessons that he's learned across many of his early roles and what it takes to take a company from early what you call smile and cry days to large market leading organizations. What sets Ethan apart is his candid hands on approach to early stage go to market. He's deeply comfortable with the messy middle of building a commercial engine and is unafraid to embrace missteps, pivot quickly and convert what many would call failure into meaningful learning. If you want to learn from a leader who has seen organizations from zero to a hundred million plus in revenue and everything in between, this is the podcast for you. So Ethan, welcome to the show.

Speaker A: Thank you, Sage.

Speaker B: I would love to start by giving the audience a little bit of context into who you are. So can you start by telling us a bit about your background?

Speaker A: Yeah, I got into sales out of college. Uh, I got my first sales job off Yahoo Hot jobs in like 2003 and I just fell in love with it and then very quickly after that got into sales leadership and kind of fell into the startup thing around 2010 and now at Coto is the fourth straight company where I've been the first sales leader in to scale the organization as you mentioned. So that's kind of how I got here particularly also I've had a focus on developer tooling. I, I like to say I've been selling to developers since before it was cool to sell to developers. Kind of before the rise of digital transformation kind of put them in the driver's seats at organizations. I was already kind of working in the dev tooling space. So that's been a, uh, area I've been passionate about for most of my career.

Speaker B: Well, and you've been one of the people who made it cool with the meteoric rise of Snyk and all of that.

Speaker A: I hope so. I hope so. I was always on very good teams that, you know, it was a team win, I guess I would say one

Speaker B: thing that you talk about a lot is this concept of failing fast. Yes. And that's so easy to say, but really hard to do in practice, especially trying to figure out what is a failure of different person or the structures or anything like that. So can we start by how do you know if you're failing and decide that you're failing fast and then learn from it?

Speaker A: Yeah, I mean, I think data reigns supreme. Right. And that's something, you know, in my time with all the great leaders at Venture Guides, I think that's something we've always had in common, is the conversation starts when the data is in front of you. And so I'm a big believer in everyone having parts of their process that are unique to them or that are authentic to them, because I think authenticity is what helps you engage with customers prospects. But whatever your system is, I want it to be repeatable so I can start studying the data of how well you're doing through that process. So that's the first thing, right, Is like, you've got to start to see data that shows what you're doing is making viable progress. I also think there's just the qualitative nature of it, where it's like, if you're trying a pitch or a presentation with customers and it's just not fun to do and it's not resonating and the prospects are confused. That's just also clearly a sign that, like, hey, maybe you're ahead of it. Like, one day the market will come to you with what you're trying to present, but right now they're not there. And so that's a big signal to me too. Like, am I like, yes, I can't wait to do this presentation again, or I can't wait to talk to this individual, like, about this process or tool we have. Like, that's a qualitative signal to me that you're on the right track.

Speaker B: And when we Think about being on the right track and having numbers at the board I was expecting to be hit and all that, while also testing out new hypotheses and learning. How do you balance that?

Speaker A: Yeah, I think it's a little bit cliche, but like that 80, 20 rule, like, once you find that repeatable process that's working, the next thing I'm doing is I'm not stopping there. It's like constantly adjusting. Like, what more can we add to the process that's working? What can we reduce from the process that's not working to continue to see that efficiency increase? Because even when you get onto something that's now working, a sales process or a demo or a pricing presentation, it can always be better. Right. And so you want to continue, see how you can maximize that. And then I like to have, like, little, like, scout teams or scout missions, if you will, which will be, you know, maybe I have one, uh, rep right now at Coto who's really focused on expanding our E commerce customers to become enterprise customers. And there's not enough data to say that it's worth having everybody do it right now, but having one person do it and figure out the methodology, and then if we see that that's, like, viable. I'll then task him with teaching everyone else on the team how to do that, and it will get, like, added into the core process that we're building.

Speaker B: I think that's a great point. And having those early, hungry innovators that are willing to take the risk is so critical when you think about, especially early days, building a team. So as you're assembling your first team, what do you look for in the people that you want to pull in with you?

Speaker A: Yeah, yeah. I think that's a critical part of it. I think also I'd, uh, caveat. Like, there's no right formula. It's like what you need to be surrounded by for your style to work. Right. And so, like, I've actually kind of three. Three things I constantly look for in the people I hire are passion, mastery, and accountability. So, like, I need to be surrounded by people who are excited. I need to be surrounded by people who realize you're at home eight hours a day, you're asleep seven hours a day. That means you're at, uh, work nine hours a day. That means mathematically who you are at work is who you are. Mastery, you know, kind of related to that, always getting better. Like, I love people who want to build things. I love people that always want to learn. We just did our most recent QBRs and they're your incredibly collaborative because it's about let's exchange best practices and come out of here all like a little bit better about how we approach our prospects or customers. Right. And then accountability, you know, especially early on when you are going to fail and you are going to have losses, you need people, I think this might be the most important, who like understand that if you're going to own your wins and say like we won because of what I did, well then when we lose, we lost because of what we did. And that's not a blame filled thing, it's how do we get to the root of why we lost so we can fix it and never have it happen again. But I found companies, especially startups that don't work out a lot of times it's political infighting. Everyone gets really good at doing this and saying oh it wasn't my fault, it was, it was this, it was that. And the problem with that is people get good at doing that and then it's really hard to understand what the actual problem or what was the actual reason you, you lost. And then it's very hard to fix it. And these companies are confused and they don't understand why they're doing better. Whereas if you have a culture where when there's a loss someone raises their hand and says hey, that on me. This is why I figured it out. This is what we can't do again, okay? We learn from it, we move on. So I think that accountability piece is, is super important.

Speaker B: And there's another piece in that which is the collaboration which can sometimes seems like it's in tension with competition.

Speaker A: Yeah.

Speaker B: And it's a two part question. Start with do you view collaboration and competition as intention with each other? And then also how do you think about building an environment in a culture where both are celebrated?

Speaker A: Yeah, I insist on collaboration and then I use competition as a motivating factor I would say. So first of all, especially the first group of people you're hiring very early on, you want people to really be there for like the long term success of the company. They understand equity. You know, I do a lot of talking about what could this outcome look like for you from an equity standpoint if you start talking to people about that, they should care way more about the general success of the company than they should them individually in that early stage. Again, a uh, sales rep who only cares about their W2 and is only about their individual success. There's nothing wrong with that. Again, generally not the person I'M looking to hire this early on. Right. I'll also do compensation triggers, like team goals that are a bucket of their variable compensation, so that people understand, hey, if anyone wins, I'm doing well to a certain extent. And it's also like a. A payment to make it impossible for you. Like, I don't want to hear you argue about a deal. I don't want to hear you argue about a lead. Like, we're all in this together. And so, you know, I really push that collaborative. Like, hey, if you're doing something and it's working, everyone else needs to know about it. And then I'll needle with a little competition. But, like, why didn't you think about that? Or why, you know, like, look at what this person's doing. Hey, this person set three demos this week. Anyone else want to jump in the pool? So I think the competition part should be fun and, like, a motivating factor and kind of like, the intense rigor should be around the collaboration. It's kind of how I look to balance those two things.

Speaker B: That makes a lot of sense. Another thing that comes up with that intensity and with people that want to win so much is, um, early days, when it feels like you're failing a lot, it can be hard to stay motivated and to keep the team motivated. How do you think about that, in addition to all these other pieces of the culture that you're building?

Speaker A: Yeah. So I think if you break a process down into enough pieces, there's always going to be something to celebrate. Right. So, like, that's part of it.

Speaker B: Is work today?

Speaker A: Well, yeah. Or like, uh, you know, you could do that. Like, some of that could be the competition, the fun. Like, I'll give you an example. Coming to work. I'll make it a point. At least two or three days a week, be the first one in, and I'll go over the SDRs. I'd be like, hey, do you know when you're the first person in the office, the lights automatically turn on for you? You know what I mean? It's like, you're just like. And then when you see one of those SDRs and they get it and they're like, there before you the next day you're like, that's right. You got it now. Uh, great job. So, like, we celebrate everything. We have a channel when people set demos. Doesn't mean the demo has even gone well yet. But we're, like, celebrating that. Right. Because it is going to be hard. Sales already has a very high failure rate, so you got to Find things to celebrate in every part of the, of the process because I think that's super important. And then humor, humor around your losses. Like, you know, a line I'll use a lot is like, this is going to be really funny story at a happy hour in three years. And that's true. Like, I truly believe that because I've been at three other companies where that is the case. And so just making people know that, like, really trying to be the one that keeps everyone off the sales roller coaster or the win loss roller coaster, which is like, oh, today's the best day ever. You gotta just put it in perspective. And it's like, look, we're gonna have losses, we're gonna have frustrating things that happen to us as a team. But like, are we 1% better than we were yesterday? Yeah. Okay, look, we're making progress, right? Like, this will be okay.

Speaker B: Well, I'm pulling from where we started as well. As long as you have the data to track it.

Speaker A: Yes.

Speaker B: Even the losses, uh, are information and data.

Speaker A: A hundred percent. One hundred percent. We do, we do close lost reviews, like close last sales deal reviews all the time. We want to understand where we went wrong. And again with just the sole objection of not letting that happen again. And so, yeah, if you make people not feel like a loss as a negative thing, but more like a learning point, I think it's really important. Talks a lot about, like, respecting losses. Learn as much as you can from them with the spirit of not letting it happen to you again. Where I get pained is when it's like the same loss over and over and over because it's, you know, what are we doing different? If we're not doing anything different, how can we expect a different result?

Speaker B: Makes a lot of sense. So to change a little bit and think about the other end of the spectrum when you're having a lot of success and the team is growing and the company's becoming bigger and there's so many great things happening.

Speaker A: Yeah.

Speaker B: How do you keep that sort of gritty nature?

Speaker A: And I think when you go through these kind of like pendulum swings in the economy that change the selling environment, I think they're a great learning lesson for you every time they happen. I think it's made me more have, uh, a better EQ about what you're really controlling and what are you really doing that's either making your success or not making your success. And, you know, we went through this amazing, like zero interest rate day period where, you know, we did a lot of things right that led to our success, say at Sneak or even now at Coto. But you recognize the things that are outside of your control that factor into, you know, we were the same team the day the interest rates changed, but the market was different. Right. And so I think it's a lesson to just like I always just try to laser focus, stay on what can I control and how can I get better. And so if you do that and uh, again, you need to celebrate, you need to celebrate the wins. Things are going amazingly. That's great. But reminding yourself that one, things could change tomorrow for reasons that are completely outside of my control. And what would I do if that happened? And again, just keeping that culture of mastery, that culture of education, that culture of like, how do we get better? I found is that is the best way to keep people grounded.

Speaker B: Makes a lot of sense. One other thing that we talked about, because we've, we've sort of started the podcast talking a lot about sales, but now more than ever, closing customers and growing within accounts is an entire company effort. It includes marketing, customer success, obviously. Sales, product, everybody. Yes. How do you build alignment across all those teams?

Speaker A: Yes, I think that's super important. I think that team selling is so important. In modern sales, we have individual kind of like slack channels for different accounts. One of the first metrics, uh, I always look at when I'm getting brought into one of those channels for a deal or uh, on the customer side. I run customer success at Coto as well. I want to see a high number in people in that channel because that lets me know that there's probably people across the company in different departments that have contributed to this account. And that makes me feel like they've probably seen the best of our organization. What gets me nervous is when there's a problem and I'm added to that channel and there's like five people in the channel. And that to me is, you know, an individual or a team that was probably either like dying or winning alone. And that's usually where you see bigger challenges. Right. And so I think it's two things. It's, it's process. You've got to build the natural feedback loops with all of these departments. So we have a, uh, sales and marketing bi weekly. We have a product and sales bi weekly. At the executive level we're talking about how do we create these handoff points better and continue to improve upon them. And so that's kind of like the science of it. And then on the art of it is you just got to over communicate especially, you know, Coto is a global company. You know, 10 to 20% of our employees are all over the world. We have a large group in Israel. We have a large group in Boston, people on the West Coast. You can't fall into, like, the slack thread war at a certain point. Like, I got in early today and I was having some communication issues with a few people in my product, or it's just like getting on a zoom with them one on one and just like talking through our perspectives. It's just underdone in today's like, kind of like zoom slack, like, which are great tools, don't get me wrong. I'm addicted to both of them intensely. But just, you can't forget like that and understanding, you know, approaching those conversations with good intent and realizing that everyone is busy and everyone, you know, and so, you know, if there is a communication blocker, it's probably because of a miscommunication, not because they don't want to help.

Speaker B: Yeah, I mean, we've talked about this a couple times on other podcasts as well, where all of these productivity tools make you more productive and they're so great, but they also. It can be too easy to forget that there's a human on the other end of the slack channel or the cold call or, you know, whatever it is. And if you commoditize people, then that's where communication falls apart.

Speaker A: I also find the context switching to be the biggest challenge of kind of the modern efficiency game. You have nine hours of zoom meetings, and it's like sales, marketing, product customer sales, marketing operations. And it's very hard to be present in each one of those when it's such a gauntlet. Right. And I really try to spend at least an hour of my day calling people old school on the phone, you know, or. Or again, get on a zoom one on one, but with no agenda. I think you got to try to balance out that kind of like, absolute blitz of these, like, scheduled meetings with that kind of communication, because I think it makes a huge difference.

Speaker B: Okay, so I have to ask, do you have any examples of a deal that you won where you had everybody working, what sort of roles they were playing?

Speaker A: Again, I am a huge advocate of team selling. If you're not great at team selling, you're probably not not great. I mean, if you're not bought into team selling, you're probably not going to be a great fit for my team. So a lot of the deals we've been in, that's the case. But I would say, like, we had a most Recent deal with our largest customer, Coto, where we did a huge expansion with them. And you know, it was just uh, from every part of their interaction with us, we crafted kind of like a bespoke part of the presentation that spoke to how we were going to not just like give them this new product but like sit with them every step of the way and make them successful. And I think we did a very good job internally. Everyone kind of learning the talk track that we wanted to present this as. And we were meeting with them constantly with different teams and different individuals. But that customer was getting the same talk track or the same like unified approach and everyone was kind of like pointing back to hey, I know you're meeting with this group tomorrow and you're talking to us about the professional services we're going to do and hey, we put this, you know, like agenda together for that and then the person would show up with that the next day. Like that breeds such trust with your customers that I just think it's a very good formula for winning large deals,

Speaker B: especially with the agenda concept. You just talked about it a little bit. But one thing that a lot of companies struggle with is the handoff for sales to customers. Success.

Speaker A: Yes.

Speaker B: How do you think about that?

Speaker A: Yes. So I very intentionally at Coto, one of my non negotiables was starting as the head of sales and customer success, uh, very early on. And I've run CS teams before so it's not like it's the first time I'm doing it but definitely, you know, I'm um, eyes wide open that in three years I hope to fire myself for some 30 year in amazing customer success leader. But it was super important to me to have the same level of accountability and speed on both sides of the house. Early on here one of the challenges and mistakes I've made. It's so easy in these startup like these hypergrowth companies as you know to get net new obsessed because one you fought for, you know, the founders built the product for three years and now finally people want to hear about it and you just are so excited. The customers are buying in on it and they want more. And then like the CS team is getting like, is like communicating with like fire signals and like uh, drums because all of the resources and all the technology, everything is going to the sales side. And that was, that was a problem I was definitely part of at different times in my career. And so I wanted to really challenge myself to say I need my CS team to feel like they're just as supported as my Net new team and gets the same level of spend and technology. And especially as we were talked recently, like, with usage based pricing expansion becoming such an important part of the factor, it's really important to me that um, I'm investing in both sides equally and that we're moving at the same speed and with the same kind of like accountability and messaging on both sides of the house.

Speaker B: That makes a lot of sense. Sensing some themes, there's a lot of like, feel fast and learn from it, but do it together. Collaborate. Use competition to really drive people.

Speaker A: Yeah, I can't stress humor enough. This is so hard. These like 90% of startups end in failure and you've got to remember that, that like even being lucky enough to be in that 10% three other times, you're going to have days where you're just like, this is what did we do? And you've got to laugh at yourself about that. And you got to pick people up off the floor and get them laughing about it too. Because a phrase I'll use a lot is like, hey, look, I know you're down today sage about what just happened and that is a, that was a tough loss or what I got bad news for you. That's by far not the worst thing that's going to happen to us here. And you got to just like laugh at that. Like, uh, and look again, can we get 1% better today and have fun doing it? Like that's how we're ultimately going to be successful. I'll catch myself with those, those scenarios and I break this rule all the time. I should not look at slack until I have a cup of coffee.

Speaker B: Oh boy.

Speaker A: Just because, you know, you're just waking up and you can really just like interpret something the wrong way or take something that didn't go well too hard and now your day is off to a bad start, right? Where it's like, I don't know, again, not going to be the worst thing that ever happens to us.

Speaker B: Awesome. Well, so we are coming up on time and we do like to end with a rapid fire questions. So these are questions that we hear from founders that we're interacting with a lot and we'd love to hear your perspective on the first one is what is the hardest part about building an early sales team and how do you manage that?

Speaker A: The hardest part about building an early sales team is, is I think again, balancing allowing people to have creative license While not having 10 people doing 10 different sales like roles or pitches or.

Speaker B: Yeah.

Speaker A: So how do you balance like the art and the science and get everyone on board with that, that like, hey, I want you to have your own creative license and I need you to come up with creative ideas all the time. But we need it to do it in a way that's repeatable and that we're like ensuring that we're doing the best things we can in our given, you know, like presentations, etc. Etc.

Speaker B: What character traits do you look for in your sales leaders? And then, um, are there any major red flags that are non negotiable?

Speaker A: The passion, mastery, accountability. Shout out to Peter McKay. The CEO of Sneaky has a great one that I've stolen which is hungry, humble and smart. I think that non understanding of failure is a non negotiable for me. So my interviews are pretty depressing because I'm asking people, you know, I'll tee someone up with, hey, what's the. Your what's your current boss think your biggest strength is? I really have no interest in knowing that. But I'm doing, I'm um, asking that question so I can come back with, well, what would they also say your biggest room for improvement is? And I just want people that are aware of those. You'd be shocked how many people like can't think of what their boss thinks they need to improve it. And I'm like obsessed with like, I'm constantly thinking about like, what could I be doing better? Right. Or another question I'll ask someone is like, what's the biggest failure you've ever had in your career and why? And people think like, I couldn't get this demo. And you're like, no, that's not the biggest failure you've ever had in your career. And it uh, you know, not having an understand everyone has faults, myself included, more than anyone. But we have to be aware of what they are and we have to be comfortable understanding that, look, it's going to be a slow process to continue to improve in those areas. Like having that is a. Not that awareness is a non negotiable for me. And then team play like again that collaboration, you know, you can't divide zero like reps that want to argue about deals or accounts or things like that. It's just not something that I can, I can get, you know, behind.

Speaker B: And also if you're aware of your faults, then you can bring in your teammates to help make up.

Speaker A: You're not a strong 100%.

Speaker B: Okay, this was supposed to be rapid. This one's actually about term sheets and fundraising.

Speaker A: Yeah.

Speaker B: Uh, when you think about funders yes. And who you're partnering with, Is the highest price always the best one, or are there other things that you should look for?

Speaker A: I don't think it's the highest price at all. I think it's. It's value. I mean, within range. Right, Right. Like, it can't be a terrible deal and a great deal, but I think it's who's going to add value? Who's going to support you? Who's going to give you honest feedback? The best investors I've had have always given me all three. And the ones that haven't, it's pretty apparent that you're not getting anything from them.

Speaker B: Makes a lot of sense. All right, final one is you kind of just talked about honest feedback, but we'll ask for one more. What is something that you look for advisors as you're building your business?

Speaker A: I look for advisors. I want someone who knows my space enough that they can picture what I'm going through. So, you know, I'm sure there's some great martech leaders out there, but I've never run a marketing sales org. I'm not going to go to you, uh, know a marketing executive and ask them questions. So someone who understands my space and again, is not afraid to give me honest feedback because that's all I can ask.

Speaker B: All right, before we wrap, a couple reflective questions. The first one is, what is one major mistake that you learned from and what did you learn?

Speaker A: I used to think I could keep my personal sphere of influence over a large team for way longer than I actually could. And I had to learn when to bring in other leaders, whether it's from within or from the outside that could start doing some of the things I would do, I was doing. And a couple of times I attempted to do that and it didn't work out. And then it was just like me is the only sphere of influence over a very large team. And you just saw the best practices degradate. And so even if you fail bringing in that leader, learn why it didn't work and go try it again. Because once you do, once I've experienced having that second line of leadership, that's just amazing. It just makes your, your job so much easier and more enjoyable. And mentoring reps is great. Mentoring leaders is like the best.

Speaker B: What's a leadership lesson that you wish more sales leaders understood as they grow their business?

Speaker A: Like learning the value you get from internal selling in other departments, from networking, from relationships with investors, with the relationships from advisors. This was a problem. I used to be a very tunnel vision. I'm just going to focus on my sales team. We have our mission. We're going to go do it. Products owns the roadmap. Let them do that. That's their job. And once I realized that the impact I could have by building relationships in those organizations and the influence over those organizations, the products and the support the sales team got, got so much better. And I think a lot of sales leaders are still kind of myopic and like, oh, yeah, the product guy, I met him like, once when I started. He's cool. Like, yeah. And it's like, I just don't think they understand. They're not scratching the surface at all on, you know, what they could get out of those relationships.

Speaker B: Makes a lot of sense. All right, last question. Where can people learn more about you and the work that you're doing?

Speaker A: Yes, you can look on our website at Coto AI. We have a lot of great open roles in Go to Market and that is a way to get in touch with me. Or they can reach.

Speaker B: You're going to have to talk about your biggest failure.

Speaker A: Yeah, I've ticked you off for the interview, so now you're going to do well. Uh, yeah, that you can go that way or, you know, please reach out and connect with me on LinkedIn. I love to network, I love to advise, and I love a good conversation about, like, all things go to market. And I'm always happy to have one.

Speaker B: Fantastic. Well, Ethan, thank you so much. Thank you. It's been really great. Built not Born. The startup Go to Market podcast is brought to you by Venture Guides. To find out more about Venture Guides and how our venture capital plus guiding model helps early stage startups build scalable go to market strategies and grow faster. Visit ventureguides.com and then make sure to search for Built not born in Apple Podcasts, Spotify, YouTube, podcasts, or anywhere else that you listen, hit subscribe so you don't miss any future episodes. And we look forward to this building with you. On behalf of the team here at Venture Guides, thanks for listening. Until next time, keep building.