How Splunk Scaled to a $10B IPO: Tom Schodorf’s GTM Playbook for Founders

Speaker A: What we did was got together and I would encourage any company to do this. Get product and sales and marketing and everybody together and figure out what are the words that you're using when you talk about what you do and make sure that those words are the same that everybody's saying them, whether it's an se, a rep, an executive, so on, and cover core things like the typical problems of our and this is an internal meeting now where you're hashing this out, the typical problems of your ICP by Persona. Throw that up on the board for a couple hours. What is the compelling value prop to address them? What are the differentiators and moats that we have or that we can put in place to outflank our competitors? What are the use cases that we have where people are going to get big value?

Speaker B: Hello everyone and welcome to Built Not Born, 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, the podcast where we break down the real stories behind startup execution, venture capital and go to market strategy. I'm Sage Nye, partner at Venture Guides. My guest today started at IBM, spent 17 years at BMC Software and then joined a little company called Splunk and helped take it from a young startup to a $10 billion IPO. Tom Schodorff is the kind of sales leader other sales leaders study. As an SPV of field operations at Splunk, he built the Go to Market machine that powered one of the most iconic IPOs in enterprise tech history. He's scaled revenue organizations from 20 million to over a billion dollars. He's led teams across North America, Europe and Asia. And he's done it all with a relentless focus on culture, ethics and accountability. These days, Tom is a board member, President of Revenue and advisor for some of the hottest companies in cybersecurity and AI infrastructure. He's also a published author, which we will link in the show notes so you can all go find his book. But he co wrote the Success the Definitive guide to building Rapid Growth sales cultures. If you are a founder that wants to learn a ton about building and leading go to market teams, this episode is for you. Tom, welcome to the show.

Speaker A: Thank you Sage. It's my pleasure to be here and thank you for that Great intro.

Speaker B: We are so excited to have you. Can we start by hearing a little bit from you? Can you tell the audience about yourself and your own background?

Speaker A: When you have a long career, you have a lot to talk about. So I'll try to make this somewhat brief. I grew up with a chip on my shoulder. I had four brothers. In hindsight, it was a great environment. But right or wrong, my brothers were a huge motivator. Without them even knowing it, I just wanted to show them that I could do something, be something other than a, uh, little brother who got in the way of everything. So that's foundational to my current thinking on career and how I run things and life in general. So when IBM called in my senior year, I interviewed them and took a job with them, moving to a faraway land called North Carolina. Completely foreign to me. I knew no one there. But IBM had a great training program in another foreign land called Texas. And that set me on a path for the future roles that you mentioned. Once I got into the corporate world, one of my first thoughts was, I can't believe they're actually paying me this much money to do this job. It is so much easier than mowing grass, trimming bushes, going to school, working three jobs, and all that stuff. And so I decided in that moment that I'd be motivated by adventure, by taking risks, maybe even by finding my level of incompetence. What did I have to lose? So I raised my hand for everything, and in the process was given the privilege of success and failure and tons of experience in all of those jobs.

Speaker B: Wow. Amazing. Okay, well, so I do want to jump in. And one thing you and I were talking about before is that the Splunk story could be this entire podcast and then some. But since we will be talking about sales mistakes, and I'm sure you learned a lot at Splunk, could you maybe share a little bit about the Splunk story? And you joined it when it was relatively small and stayed for a long time. So are there any details or maybe a story from the early day and a story from the later days that would help give the readers some understanding of what it was like?

Speaker A: Sure. Well, first of all, it was crazy. Major, big time immersion into Silicon Valley. Even though IBM, UM, and BMC were tech companies, they were very old school. This place was exciting. It was hip, was in an old brick warehouse in San Francisco. It had this dangerous slide that went from one floor to the next. People on mopeds racing around. There was a kegerator, there was graffiti the legendary triple meaning T shirts, cots and couches. I mean, it was just crazy. Luckily, probably for my liver, if nothing else, I lived in Atlanta and was in the field 80% of the time. So I just visited that. But in spite of that, from my view, Splunk had five things going for it. And these are kind of my things. But if I was giving advice to somebody looking for a new opportunity, whether it's a sales rep or a, uh, sales executive, I might give them the same or similar guidance. One, it had a massive future tam. It didn't have the immediate TAM necessarily because the product was basically one use case, but you could see that they could expand into something much bigger. And it's so much easier to sell into a big TAM than a little tam, because then you have an opportunity to grow. It's still hard. Two, they had a very passionate customer base, even though there weren't that many of them. But the ones that understood what machine data can do for them were very passionate about it and they got a lot of value. Three, it, uh, had a very good product market fit. So this is a lesson, I think, for any of your founders or anyone. In this case, it was finding a needle in a haystack for data center problems. The product was very good at that. Most people know Splunk as a sim, but it was really Needle in the haystack was the first, uh, use case. Four, we had an executive team that was all operating on the same page. They were functional, hard driving, non political types. We argued all the time, but there was no passive aggressive behavior. Once we left the decision room, we locked hands and we did it. The chemistry was very good. And then five, and this one might surprise you and your listeners. I inherited an inexperienced, although, uh, passionate, but very disjointed go to market team that was in desperate need of process and discipline. And the reason that may seem a little counterintuitive is because that sounds like a bad thing. But the reality is that's something that I felt I could fix. That's in my wheelhouse. That other stuff I mentioned I can't really fix. I can't fix product market fit very easily or a dysfunctional team, but I could fix those things. So combine all that. Splunk was so small when I joined and a little bit shocking, but the company really cared about delighting its customers. And regardless of any problem that would occur, the entire company would rally around. Now, one of the big learnings from that is that you can't do that and scale at the Same time, I had the privilege of working with great people. Of course it's a team sport, but early on when we talk about the journey, it was 2009 when I joined and the world was barely recovering from this financial crisis that had hit the year before. It was really bad, but we were starting to come out of it. The CEO had just laid off a bunch of people right sized the business because there was no funding at the time. There were IPOs, there was nothing. And he hired me and he said, let's go, we're going to grow out of this thing. So that began my portion of the sales journey there. And I, um, inherited 30 person team. Fifteen of them were sellers. There was some inside and some outside

Speaker B: folks at Splunk, but then also post Splunk. Um, you've guided and worked with a lot of sales organizations and I imagine that everyone is different and has its own challenges. But there's probably some things that you're looking at or that you're trying, that you're able to repeat. I'd love for our, uh, listeners to be able to hear what are some of the things that you try or what are some of the things that you look for when you're trying to help struggling sales teams.

Speaker A: The first thing is icp. I think that drives everything. If you get that right, you will be much more effective and much more efficient. So many companies, what they don't get right is they chase everything. Any shiny penny, any logo, it's bank of America and we have an opportunity. Yeah, but your product is an SMB product. So why are you going to bank of Americ America? Oh, because I have a friend there and we might be able to get a deal in and. Well, that just means you're going to turn your product from what it is into something that it isn't and you're going to spend five years doing it. So understand your ICP and you will save yourself a lot of hassle. You got to define it. Then you design your GTM around that because it determines who you hire, how you train, how you price, how you sell, who you compete with, how you market. Everything is around that. And so I see a lot of companies failing there. There's probably two more areas that they fail a lot. The whiteboarding. So companies don't seem to put into place a messaging mechanism that puts the company on the same page. So what we did was got together and I, uh, would encourage any company to do this. Get product and sales and marketing and everybody together and figure out what are the words that you're using when you talk about what you do and make sure that those words are the same, that everybody's saying them, whether it's an se, a rep, an executive, so on, and cover core things like the typical problems of our. And this is an internal meeting now where you're hashing this out, the typical problems of your ICP by Persona. Throw that up on the board for a couple hours. What is the compelling value prop to address them? What are the differentiators and moats that we have or that we can put in place to outflank our competitors? What are the use cases that we have where people are going to get big value once we do that? Literally write it up on the board in a way that everybody in the company agrees and then fine tune it and then have everybody in the company present it to their peers and or their managers while fielding questions. The benefits of this are ginormous, including that you amplify your brand and you build confidence with everybody in the company that they're onto something great. So that's something that a lot of people miss.

Speaker B: I want to get to your third thing, but the interesting piece that I'm seeing here is everyone talks about ICP and focus and message and all that to help the sales team learn faster and be more productive. But you're adding in the element of product, which I just want to call out for our listeners, because it's so important. If your icp, if there's too many of them, which arguably means you don't have one, then not only are you distracting your sales team, but the element you're bringing in is you're also distracting your product team. And that can be really detrimental for a young company.

Speaker A: If you do have a big tam, one of the things that I would recommend is to layer it, bite it off in chunks, take the core piece that has the least amount of friction and then knowing that you're going to expand, but don't do it right now. You can have a vision for it, but don't do it right now. And so depending on the product, you can maybe have some people working on it or doing some skunk works or whatever, but don't confuse them by going after every single account that's out there. The third thing that people I think get wrong or that needs to get put in place is a sales process. And we may hate that. We may go, oh no, we don't need that. But the reality is you do. You need to have some way that makes sense that you can Map the buyer's journey with your products. And the way we did this at Splunk and the way I would encourage any young company to do it, really, once you get some sales, I mean, you could have anywhere from three sales to 50 before you might start to fine tune your sales process. We had had, I don't know, 50 or 100 customers by then. Pretty small, most of them. But I come in and I'm like, well, how do we sell? And I ask Tony, and Tony says, well, here's how we do it, and blah, blah, blah, and Medic this and Sandler that and blah, blah, blah. And then I talked to Jean and she says, no, here's how I sell. And anyway, I took the three best sellers, I brought them in a room, and I had three whiteboards, big whiteboards. And I said, each of you draw how you sell on the board. How do you do it? Now, this is not to be confused with whiteboarding. This is. What is your process for getting from a lead to a closed deal? What are the elements of that? How do you do it? What are the assets you use? What are the different kinds of calls? Whatever it is, you tell me. They all were fairly successful within the company, but they did understand, after some translating of the message that we cannot scale long term by having multiple different sales processes. It confuses us all. It confuses the customer, confuses the product. We don't know how to market it. It's all that. So I left the room and gave him a task of over the next three hours, four hours, whatever. If you need pizza thrown in, we'll do that, but come up with something you can agree on that you will move forward with and not deviate from unless we all get together again and decide on a different one. So they did that. I didn't really care what they came up with because I was naive. I didn't know that product and their space that well. To know Splunk was novel at the time. So they came up with something, and we put it into Salesforce. And then we used that as our sales process, which, of course was refined every year. But it was a start and it helped us to scale. So those are the three areas that I think people need to look at, especially if you're a young company, that

Speaker B: makes a lot of sense. And so if we then take the next step. So you figured out those three areas. You have one icp, uh, aligned messaging, aligned sales process, all that. Now it's time to build the team. How do you balance hiring for growth versus Hiring for the long term, especially when you're moving fast. And are there any common mistakes that you see leaders making?

Speaker A: Well, when you're growing fast, I'll just skip right to the mistake part. They tend to hire to get a butt in a seat and they short circuit a lot of things that they know they shouldn't short circuit. But they're so busy closing deals and helping their current team that they just grab people and they tend to hire mini me's, which is a terrible thing because then you get groupthink. It's just degradation of skills and innovation. So that's a terrible thing. But the longer answer shortly longer answer on hiring for growth versus hiring for long term m is I would always look at hiring for the long term almost without exception. I think you're doing a disservice to the people. If you just are hiring them to grow for the next six months and then grow our business and then imply that they're disposable, I don't think that's good. So I would look for people who fit our culture and have a very strong will, but are also of course intelligent and have shown that they have a skill of learning technology quickly. The benefit is that you may end up with some more senior people and you may have to pay a little bit more, but they can probably look a little bit more around the corner than people who just churn and burn. And I don't mean that super derogatory for people who are just looking for growth, but sometimes that experience and wisdom of people who are thinking longer term will construct better deals for you and will result in much better expansions.

Speaker B: Okay, I have a follow up question for you on this subject, which is especially in the early days, it can be tempting to hire a sales leader who has a great Rolodex because you're trying to get customers and deals and all that. So that preset introductions or preset relationships are so tempting. When you what are your thoughts on trying to train people how to sell the product, build the relationships and really starting from the ground up of coaching versus hiring someone who maybe has a Rolodex from a different company or sells the same five people all the time?

Speaker A: I've done both. So I have actually hired people for their Rolodex. Typically when I've done that it's been people who work in a very specialized industry or in particular the federal government, the United States federal government, or even governments overseas because not so naive as to think that relationships don't matter. In particular, with large Bureaucratic organizations like that, they are very relationship based. They tend to be. So if you're going to break into that market, you're probably better off finding somebody with that Rolodex. The problem is that that's not sustainable. You get a couple of customers, it may be able to jumpstart something, but you're not going to long term survive if you have a worldwide product. And so if you expand it to being where you're hiring for Rolodex all the time, not just in those specialized areas that reference, you're going to run out of gas pretty quick and you're going to have major problems. So I wouldn't do it very often

Speaker B: and it sounds like being intentional about it is the piece of advice as well. Making sure it's in the industries where the relationships matter and uh, you understand the decisions that you're making as opposed to just blindly going into it 100%.

Speaker A: But if you're building the organization, at least if you build the organization, not around that, but on the more enduring side, you're going to do more homework on what kind of a sales process and value propositions actually exist. You would like to get to a point where you can plug and play. I mean people come and go and you want to be able to hire great folks who can come into your system and be successful at it when without having a Rolodex because you've done the hard yards in figuring out how you provide the most value to a customer's buying journey makes a lot of sense.

Speaker B: I actually want to switch gears a little bit and talk about AI because there's a lot of noise around agentic, uh, AI and frankly it can make it hard for sales teams to communicate with their prospects and customers. And so I'd love to hear from your perspective, how can a sales team and leaders cut through all the noise and communicate their value?

Speaker A: He mentioned the key word which is value. So to me, and what I would tell salespeople or anyone is that receiving value is timeless. I don't know any time in history when people didn't want to get good value on anything. Consumer product, enterprise product, SMB, product, whatever. People want good value. So AI or not, we should think twice as hard about value and work on that, that a lot as a person, as a rep, as a company, as you know, by the time sales gets involved, we're halfway through the sales cycle. And AI is probably going to make that three quarters of the way through the sales cycle before we get there. But sales will probably end up getting involved at some point and humans thinking in real time with another human is for the foreseeable future I think going to be very important. And so I'm not too worried about it from that standpoint as long as we are providing value at every step of the way. But I look at value in a couple of different metrics or ways. One is above the line. So above the line, I think of it as those are the goals and initiatives and strategies of the company and typically involve higher level executives and then below the line. And this isn't to degrade anybody who actually exists below the line, but below the line would be more about, uh, product functionality or features or even some initiatives that some people would have. And they could be department heads or individual contributors or whatever. Very important. People make a lot of decisions and they certainly influence stuff, but they have a different value prop. If we continue to tie things to value, we'll continue to win in the marketplace.

Speaker B: I think I'm going to quote you back to yourself now, but one thing that I remember you saying was as a sales team, we're trying to empower our champions within our prospect's account, within our customer's account, to ultimately sell the product to all of their peers. Right. And to get the process through. And so to your point about the different areas of value, there's a lot of nuance to thinking about how you empower someone to sell to their boss versus their peers versus someone in another org. And it just depends on the product to depend on how many different people you have to touch within the account. But there's times where AI can create the brief that you're going to hand to your peer to figure out how to deploy it themselves, or the solution brief or whatever it is. There's times where you need that human element for the executive types of conversations

Speaker A: because people buy from people in general. Especially high dollar enterprise sales type.

Speaker B: Fantastic. Well, I know that I've kept you for a while, so I do want to make sure we move through the rest of the questions. Actually, I want to go back to something that we covered a little bit at the beginning, which is there are different types of people that you hire early on in the building process versus later on when a, uh, much larger company is really just about scaling. Are there characteristics that you look for those very early hires and do those characteristics change over time as the company scales and the brand becomes more recognizable?

Speaker A: They certainly do. And I use this framework that's called skill. Will, you may have heard of it before, but basically it's a four box with will on the one side and skill at the bottom. And there are attributes that are required to be successful in any given role and early on in a company's development. And this is something that each company can think about. But the way I would think about it is early on you want people who are more on hunting side, who maybe are great at selling a single product, who are probably highly technical and they're fearless, they don't mind having doors shut in their face later on. And I'm being a little bit dramatic with these characteristics, but later on you want people who are good at account development, who maybe are okay doing more research and planning before they go on a call, and who are fearless but in a different way in that they're okay calling high in the account, they don't mind calling on cfo, no problem. And also they can put together the pieces of a multi pro product or platform solution and sell strategically. So those two things, those two areas of early on versus later on are actually quite different skills. And so as you move through time you will look for different folks to hire. But with all of them, whether they're early in the company's development or later on, I would look for this is sellers primarily humble and hungry, serious, measured, not super emotional people having two ears, one mouth. Think long term, think of their company and their team over themselves. They're coachable, no lone wolves, no victim mentality, those kinds of folks.

Speaker B: And when you talk about building healthy cultures and strong organizations, managing those types of organizations, there's a line between being hands off and empowering your team to do things themselves, but then also being too hands off and having no idea what's going on. So how do you think about empowering a team without micromanaging anyone but also giving some freedom?

Speaker A: Well, you walk the talk. So you talk about it and you let them fail at times without punishment. This is maybe easier said than done, but you got to do it and you got to effectively communicate and translate the message in such a way that they can relate it to their role and their motivations. Encourage them to take risks, to support the mission of the company and keep their eye on that ball, that North Star. As long as they don't violate a cultural norm or a non negotiable. And you shouldn't have a lot of non negotiables by the way. But you coach them and ask questions early and often so they can begin to manage themselves. So that's how I would empower the team.

Speaker B: Makes a lot of sense You've been giving a lot of advice on this podcast, and I think our listeners are gonna be learning a ton from it. What's the best piece of advice that you've ever received and who gave it to you?

Speaker A: There's so much I've been so fortunate to have worked with so many great people. But I'm going to go all the way back to my dad, and I did give this some thought, and the reason is because this lesson that he taught me, perhaps unknowingly, is very foundational to how I think and a lot of the things that I've said so far. So I was 19. I wanted to buy a home, and I had $2,000. It was a cheap home, by the way. It's probably been burned down by now. I needed 5000 for the down payment, so I was 3k short. But I thought I could manage the mortgage after that because I had two or three roommates that were lined up to help pay it. So I was going to become an instant landlord. So I went to dad to borrow the money. He said, fine, I'll give you $3,000. It's 15% interest rate. I'm, uh, like, dad, I'm your son. Come on, give me a break. The bank is only charging 5. And he said, well, go to the bank. And so I went to the bank. They wouldn't lend me the money because they won't lend money for a down payment. And in fact, as soon as they knew that I was looking for a loan for the down payment, then they wouldn't even finance the house. So they said, uh, get out of here. You're 19. You have no credit rating. Get out. So I borrowed the money from dad, and then I went to a different bank for the mortgage. And I didn't tell them that I borrowed the money from dad, but the lesson he taught me was, of course, some tough love and to always have a good alternative. I did not have a good alternative, so I had to pay his interest rate. And then finally that paying off a higher interest loan as soon as you can, or they will eat you alive. Later on, I talked to dad about it. He would have owned me money anyway at a much better rate. But he did want to teach me a few things, so I guess I let him do that. And that was great advice. Or great advice. Great lesson in life.

Speaker B: Oh, uh, that's amazing. It's so fun to hear. Between that story and then being the youngest of five and all of your early career and everything, the ways that your life has impacted the way that you think about building teams and forming the lives of the next generation of salespeople and sales leaders. Really cool to that point, actually. And maybe it was telling the bank that you didn't have the money for the down payment. But what is one mistake that you made early on that you think others should watch out for?

Speaker A: Well, I've made, uh, hundreds of mistakes. All of them, of course, not as dramatic as others. But one of the biggest ones that I think a lot of teams make mistakes on even to this day is what I'll call the unit of one. If you think of unit of one, that's selling as a team sport. And it is the team required of the skills and the roles to get, get deals over the line and have a delighted customer. And it's not just the sales rep that is the unit. So I didn't really fully internalize that or understand it. And I allowed the board at one time to convince me to hire more and more reps because they saw, oh, there's a correlation here between the more reps you hire, the more money you'll get. So hire more reps, here's more money to do that. And I'm like, yes sirs, I will do that. Well, I did it, but I didn't hire the ses. It, uh, was very technical sales. I didn't hire other critical support staff, solution architects, services, personnel, on and on. And so several of the reps failed badly. They quit or they got fired due to this lack of support. And this was on me because I didn't know it or understand it and I didn't fight for them. So the huge mistake I made, and one that I will never make again, is to and not allow anyone that I work with to hire just quota carriers because they think that's all that's required for the sale. Unless that is all that's required for the sale.

Speaker B: Great lesson. All right, before we wrap, I've got two reflective questions that, uh, I'd love to give our listeners to be able to take back. The first one I think might be the hardest question of the day, which is what is one of your favorite sales memories from your various experiences?

Speaker A: A lot of those too. But the first one that came to mind is probably the most interesting. I was a sales rep, this is quite a few years ago, and I was very excited because I was teeing up the biggest deal of the quarter for this company. It was a multi billion dollar software company. And as a result I had the privilege of going up to the 88th floor and seeing all the executives to discuss it and get this valuable sage advice from them. So everybody but my boss was at least four levels higher than me at the time in that meeting. It was very intimidating, but I figured worth it because I'm going to get those silver bullets, and they're going to help me win this deal that's in the balance. The wisest people on the planet. So I went through my pitch. I told them all that we've done so far. I fielded questions, told them the issues and the blockers, and did all of that. And I was expecting, at the end, I was like, wrapping it up. I'm like, okay, so help me out. What should I do? And the CEO got up and merely said, don't screw it up. Uh, he didn't use the second word. He used something more colorful. Then he showed me to the door. That was it. I wouldn't say that it's necessarily a favorable sales memory, but it was very deep and foundational in that I would never, from that day on, if I ever made it into management, which I did, I would never just be that person who grilled, grilled, grilled, took, took, took, and didn't add value or try to add value to every conversation I had with our own employees or with a customer, no matter how big or how small the deal was and no matter what their role is in the company.

Speaker B: That's a great lesson, unfortunately for you. Learned the hard way, but what a great message. And again, talking about how these threads keep weaving through some of the rest of the learnings and things that we've talked about today, I can see how it's impacted how you thought about leadership and particularly go to market leadership in your career. What is one leadership lesson that you wish more founders understood?

Speaker A: Just one. That the product almost never completely sells itself. Once you get beyond the first few customers that totally get it, those early adopters that you essentially design the product for, then after that, it gets a little harder. And a lot of founders don't realize that. They just think, okay, I can't handle all these sales myself, so I'm going to hire salespeople. It's going to be easy. Well, that's not really the case. It gets really hard after that to scale. And so to have respect for salespeople is not just being a whiny, overpaid annoyance, but highly skilled, honorable profession that connects the dots between the solution and the value received. So founders should. I, uh, would like it if they take to heart that the solution's pretty good. But make sure that it continues to have an outstanding product market fit. What compelling value does it give to the Persona that you're targeting? And it's not just a cool science project. So think of it that way. And along with that, pretend that you're selling your product to the stereotypical curmudgeonly and highly skeptical CFO that we all know exists. And that'll only part with their money if they can easily understand the value to the company goals. And keep that in mind even if you're not selling directly to that person. But if you think of that, I would love it if all founders thought that way.

Speaker B: That's amazing. Tom, um, this has been so much fun. Thank you for coming. Where can people learn more about you and your work?

Speaker A: They can reach out if they've seen the podcast, reach out on LinkedIn and happy to connect.

Speaker B: Fantastic. Thank you so much. And readers, thank you for joining us on Built Not Born, the podcast where we break down the real stories of startup execution. If you enjoyed this conversation with Tom, please be sure to subscribe and leave a review and we will link his book in the show notes as well so you can go check that out. And if you're a founder looking for guidance on scaling your startup, check out ventureguides.com thank you so much. And let's get to our 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 building with you on behalf of the team here at Venture Guides, thanks for listening. Until next time, keep building.