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Fundamental Insights on Succeeding as a CRO, With Scott Stouffer
Episode 204th October 2022 • CRO Spotlight • Warren Zenna and Lupe Feld
00:00:00 00:48:46

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CRO is a new job title, but that doesn't mean there's a lack of knowledge on how to succeed as one.

In this episode, Warren and Lupe are joined by Scott Stouffer, CEO and Founder at scaleMatters. Join them as they discuss a key thing sales-centric CROs are often light on (and what landed them in that CRO seat), how to stop throwing money away by finding your product-market-message fit faster, the problem with data, bringing the whole team in on experimenting, what we're forgetting when we embrace failure, why you need a safe environment to improve the company, and the two things Scott would ask when interviewing for a CRO role.

🔗 LINKS

Connect with Scott on LinkedIn, or by email. scaleMatters' podcasts are The Data Room, and Go To Market Excellence.

You'll find Warren and Lupe on LinkedIn too.

Be CRO-ready from day 1 with Warren's CRO Accelerator course here.

Transcripts

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I mean, it was so many conversations that are so on point of what you and I have been talking about here for the last like year. The main ones are things. First there, there is still a big dialogue around what a CRO does. . Yeah. And, and what, what a CRO oversees. There. There, there was an agreement.

Matter of fact, one guy, I had a bit of an argument with him. Yeah. I was sort of saying, as you know, my point of view that the customer is a very key part of the role for many reasons. And he was saying I'd never let my CRO touch a customer.

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But anyway, the other thing was also how does someone become a chief revenue officer? How do you break into the role when you never had one before and what do you look for? And it was just, it was a really, Bunch of conversations with some good people anyway. I bet you'd be interested in knowing that there's still a lot of chatter about those topics.

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led Visual Networks Public in:

And since:

So Scott, welcome and thank you for being here.

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And, and, and in fact, you could argue that sales really only drives revenue in companies that are very enterprise focused and where the top of funnel is driven by sales people out there creating their own pipeline. In the vast majority of companies today, particularly any that focus on SMB or mid-market pipeline is driven by top of funnel activities, right?

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Our largest customers are couple hundred million. Most of them are in the, you know, seven to $30 million range. And you know, to the extent we see people with CRO titles, they are their understanding the top of funnel part of generating revenue is pretty light.

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I mean, there's, there have become these titles that were meant to imply, I believe. I'm not really sure who even invented them, but I, I believe they were meant to imply some broader set of responsibility than what the historical titles. You know, articulated a and you know, but now for whatever reason, and I think it's largely cuz if you feel like you wanna hire this person and they currently are called a VP of sales.

You know, it looks like they can get an upward move if they actually demand a, a title that's CRO or something like that. You know, I don't know. I'm, I'm, I'm kind of speculating on that, right? Yep. But you know, you, you often get title inflation, particularly in in early and growth stage companies because you are well, usually you pay people less money than big companies do, right? Mm-hmm. , so, so there's, there's things that are easy gives, right? Mm-hmm. , which are titles. Yep. Exactly. And I, I think that is

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You know, where there, the, what we are doing, what we've done to get here won't get us there, so to speak. Right. What are the things that typically companies at that, let's say eight to 30 million in business, in sales, do seem to be almost repeated bad behaviors that if they stopped doing 'em or did something differently, they may see different outcomes.

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When I think about go to market, You, you've gotta get a number of things right. To be really effective. First you have to have product market fit. And, you know, we, and you, that's a term that's often used, but I, I like to include with that message fit, right? Product, market message fit. Okay? Which is, you've gotta have something. That provides real value to some type of buyer, prospective buyer, right, your icp. And, and then you've got to message it in a way that they actually understand that. So, so you've gotta get product market message fit. Maybe not perfect, but. At least to the point that it doesn't act as this latent friction on everything else that you do.

And I see, you know, I see a lot of companies, early stage companies, you know, in their quest to not spend money try to rely too heavily early on on content marketing, right? It's cheap. I can write a blog. We, we'll build a website. I'll do a blog, maybe, you know, be out there stalking on LinkedIn and, and try to put some interesting content out, and people will come to our website.

The, the problem is, and that's, that's what I would generally consider unpaid inbound, right? Mm-hmm. The problem is that just takes forever. It, it takes forever for your, your little bit of content, no matter how good it is to rise above the masses and the pollution and start to actually bring people in. And, and what you really need to do to get to product market message fit is get as many at bats as you can and do that early.

And so, you know, we've been big proponents of. Of companies spending money either on outbound prospecting, you know, could be through a third party SDR type prospecting mm-hmm. , or spend money on paid ads. Because you've gotta get some initial people to talk to. And, and you know, in our experience, you probably have to talk to 50 to a hundred people to start you know, working through the kinks of your messaging and positioning so that you actually have a a product market message fit that's not gonna hold you back. Mm-hmm.

So that, that's the first thing is I think you know, in, people aren't willing to invest upfront to get enough at bats quickly to get the product market message fit quick enough. Okay? And instead they just try to slow roll it with you know, content driven marketing and everything else, and that, and that just causes problems. You burn through a lot of capital cuz you're still spending, during all of that time, you're still spending all your money on r and d and that sort of thing, right?

Mm-hmm. . So you all, you actually had to spend more money up front to shorten the, the, the overall timeframe. So you get product mark message.

Next thing you have to focus on is, is strategies, right? You have to optimize for the strategies you use to actually either create or capture demand from that ICP for where you have ideal customer profile in case the acronym's not well understood.

Mm-hmm. For, for where you have product market fit and You know here again, I, I think people try a lot of stuff. Right. Think about all the various, let's assume it's not a PLG playlist, but it's a product led growth play. Mm-hmm, but instead it's a it's a motion that has some kind of sales involvement in it.

You know, you might do events, you might do paid media, paid search ads, paid LinkedIn ads, paid Facebook. If you're an SMB focused company you might do content syndication. You might do prospecting, potentially. There's a channel partner play. So there's all these different strategies you can choose from and you need to go through a fairly methodical process to figure out which of these strategies.

We like to think of a, like a portfolio manager, right? An investment portfolio manager. You've got a bunch of money you wanna allocate that money to the assets that are gonna deliver the best return. Same concept in terms of trying to figure out which of these strategies are gonna be most effective or which are, are not effective.

Mm-hmm. And and, and, and I just don't think enough people consciously think about that's what they're trying to do. Right. They're trying to be a portfolio manager. Instead, they, they just sort of go through the motions a and subsequently one of the things that, that they don't do particularly well is figure out a way to measure Hmm.

The effectiveness of, of these things. I mean, there's a lot of You know, there's a lot of interesting content out there and podcasts out there on metrics and KPIs and stuff like that, but they tend to be fairly high level. There's, there's a lot more or need to do very tactical and granular measurement of the things that you are doing so that you can figure out what levers work and what don't.

So, Product market message fit, you gotta nail first, then you gotta get these strategies. And then the third thing is you have to optimize around a set of processes. And, and on the lead to deal process, if you will, think of that as, okay, let's say a lead comes into the website. How does it get distributed?

Right? Who, who, who's gonna respond to it? Is it an SDR team that's a first response team? Does it go directly to a sales person? Is it round robin distribution? Right? What's the process for allocating these things so that we make sure that they, they get touched quickly? What are the, what's the sales process, et cetera.

And you, you know, you need to optimize those processes over time so that they're repeatable, then predictable, then scalable, and ultimately efficient. So, so to me as longwinded answer, but I, I think it's a fairly standard sequence of things that you need to optimize around as you, you, grow out this company and, you know, no company comes out of the womb and has all that stuff honed and, and instead it's just a continuous set of iterations that we all go through.

And this is why well, I mean, one of the things that our company, you know, promotes heavily is the notion of you've gotta have data. Given that getting to an optimized state, requires iteration after iteration, after iteration. It. What we've seen without question is the companies that can do that the fastest and burn through the least amount of capital along that process are the ones that have good data available to inform those iterations.

Mm-hmm. and, and, and we just see so many companies. I, I call it going through the motions, right? They, they go through the motions. They, you know, they talk about experimenting, but, but they don't experiment like scientists do, right? What does a science experiment? You have a hypothesis. You figure out how you're gonna test it, which means, you know, you have to determine.

Front before you even start. How are we gonna measure this so we know whether the hypothesis proves out or not? That's the same concept of iterating and go to market is if you're gonna try something before you go off and do it. You need a criteria, how you measure whether it's successful or not, and you need a way to measure it.

Right? And, and, and just so many companies don't consciously think about this process of iterating. And, and as a result I'm sure you both have seen it. I've seen it a hundred times. I've actually contributed to it more times than I want to admit. But you hold on to things that aren't working. Forever. Mm-hmm. . And so, So you just are throwing money away. Yep. And it's largely because you don't have a good way to to, to evaluate.

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Building a process that you just described. And so that in itself, I think could be a hindrance for their success, is they're going to put in place things that they may not know a lot about, but they're also not gonna have that discipline and that structure to measure and test.

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And again, this isn't meant derogatory or anything, but you don't often see that type of mindset with that structured, highly logical thinking, analytical approach to stuff. The sales function.

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Cuz you know, we've done there, we've been there. We sort of look backwards and we can go, Okay, this is probably what you should do next time, so to speak. Right. Cause it really is sort of a repeat. Process that while it's obviously gonna be bespoke a bit for each organization, there still is one. Mm-hmm.

there's some things you have to do, but I'm seeing is that organizations at that stage are typically have number of characteristics. One being is that they're usually led by a founder who created the product. Right, who has a very different sort of emotional relationship to the business than a commercial leader would.

Right? So it's someone who's built some software or developed an idea and is smart enough to get that up off the ground. And people whom are in that sort of mindset, that type of person tends to be very dug in on a lot of ways in which they view how they wanna do things. Mainly, mainly because they're comfortable.

You know, it's just there isn't really a familiarity with thinking outside of their way of thinking. Maybe they think link engineers, they think like product people, and so they in a way sort of feel like, I get a sense that they'd rather learn the hard way. , then just take advice, you know? And so I see a lot of the mistakes being made that are natural because the things you mentioned are all dynamics that companies have.

They're all the same, like you said, either. Mm-hmm. , I'm not talking about this properly. People don't get what I'm saying. They're not resonating. I gotta figure that out. Where, how do I get my people? All the problems are the same. And so without someone handing them a blueprint and saying, No, no. You're about to make like these 10 mistakes, cuz y'all do, it's nothing, no offense.

It's just is what happens. Do this instead. It's almost like I'm hearing a lot of, Nah, I'd rather screw it up first and, you know, figure it out. You know, And I, I think there's a weird way that interrupting a mindset is a key to this because it's, I, I make this analogy a lot, probably Luka's tired of me doing this, but yeah, I'd look at it much like health and dieting.

There is no end to the information we have about taking care of ourselves. No one doesn't know what to do to be healthy anymore. Yeah. No one doesn't know. It's like, of course we know, but we just don't do it. Right. Because knowing it isn't really the issue. It's actually implementing it is the problem.

And there is a mindset of an early stage company that's less ideas than a later one where the problems are graver, the stakes are higher. You know, they're willing to cry uncle at 50 million when the stakes are really high. Right? And I, the idea I think is how do you, in your world see making a impact on that earlier mindset to change it so that people are willing to kind of avoid the pain they have to go through of making their own mistakes before they take on outside counsel. What's the, what do you think is a formula for getting that?

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First of all, if you're a person who is willing to try to start a company, You tend to have an outsized confidence in yourself to begin with, and I, and I can, you know, look in the mirror and say that about mirror myself for

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And, and so when we initially started, we were going to be a outsourced sales and marketing engine for early stage companies. Mm-hmm. And and, and we met with a lot of early stage CEOs and, and these are people way less experience than I am at this, right? Mm-hmm. . And I said, we'd say, Look, you're gonna fail here.

Here are the reasons why you're, you're gonna have a really hard time building effective go to market, be at the scale that you're at. And, and trying to tell someone who has the confidence of an entrepreneur that they're going to fail. I mean, they're just gonna go, Yeah, I mean, If I listened to everyone that always told me I was gonna fail, I'd never try anything.

Right. You just don't have a, an open mind to, to the notion that you might fail. And so, yes, to your analogy of the house being on fire, you have to almost fail before many of these people have to almost fail before or feel like they're failing before they're willing to kind of take on the a more receptive view to outside influence?

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I think there's a bit of a great to which, well, you know, this is what it's like, you know, when you do a startup, you get, you bruised a lot and you know, it's part of the allure in a way. You know, if I just, someone just handed me over a book that said, Here's the problems to solve. What the hell am I doing?

You know, I mean, I sort of, the journey is to kind of figure stuff out, but it comes with a big price. And I think there's a weird, You're right. I mean, I think it really does have to do with the mindset of the person. Your point earlier, which is brilliant about, you know, yes, people who start businesses are a certain profile.

They do have certain types of psychological profiles. And I guess it's a question of do I, am I, do I want to go on a journey of discovery that's fraught with mistakes and errors and pain till I arrive? Or do I want to just have someone hand me over a blueprint and I can get it done faster? I think. I think you're maybe possibly crashing into someone's sense of personal adventure in some respects. I, I see that I have.

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I wouldn't fall down.

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Technical people. I mean, and, and so maybe data is the way you break through. Yep. Yeah. Prove it to me. And, and, and get, get them earlier to to see that maybe things aren't working as they Yep. Thought they were. Yeah.

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But there's so many companies that haven't done that first thing that you talked about, which is, what problem do I solve? What pain point do I relieve? And if you could just start there and not, This is cool, this is fun.

This is something that's needed out there in the marketplace, but what pain point are you solving and build kind of your, your story around that, and then kind of take all the different steps. But so often data is celebrated as a success when it really, you know, sometimes is. Indicative of more failure than success.

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They will certainly find a way to manipulate it to shine a better light when they have to talk to their board or, or investors or, or even customers, right? But, but I think most of us are able to secretly understand what the data's telling us. Even if we're not willing to acknowledge that to to to third parties.

Right. Cause there's a risk in acknowledging it to third parties, particularly if you're not at the point of knowing what you wanna do about it yet, if that makes any sense.

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But initially, as a cro, it takes a lot of courage to say, You know what? This isn't working. And you know, we're, we've invested in this process, whatever it is, whether it's inbound or. You know, paid ads or, or what have you, and it's not working. And really having the courage to speak up while you are also trying to prove your worth and the value that you're bringing and what you essentially sold during the interview.

And, and I feel like, you know, as a CEO, that is part of the job of being a CEO and not so much entrusting. aligning the expectations and aligning what your. You know, kind of attainment or achievement should be. And I think sometimes that piece is missing and, and some of the things that, and some of the businesses that I've seen that aren't doing so well and eventually, you know the rope runs out and the CRO is out and then a new one comes in and it's an even, even bigger mess because, Oh no, we've tried that.

Let's not do that cuz we've tried that. Well maybe you didn't try it the right way. And so that's, I think . And then of course, you know, you dress the pig and then you go to the board and you ask for more money. So that I think becomes a, a recurring cycle. And I think maybe how do you fix that? Is would be a question, Scott.

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It, it's a year and a half later when it's still not working, that it takes a lot of courage, right? But You know, if you go back to this notion of iterating mm-hmm. , and in fact we've started to talk about it internally as agile go to market, right? Cause you're basically doing these bite sized experiments, right?

So if you, if you understand that that's actually the process everyone's going through, but you raise the level of consciousness about it. To your ceo, to your board, to your team, then you're kind of all in it together, right? Because it's you communicate, Here's the experiment we're trying, you know, here, here's how much we're willing to give it, how many months we're gonna give it.

Here's how we're gonna measure whether it's effective or not. Right? And then everyone looks at it together and sees whether it's working or not. And if it doesn't work, I mean, nobody expects all the experiments to work. What they expect is. You know, failed experiments provide insight that ultimately lead to successful experiments.

And, and so the extent to which you can have ev you know, all the relevant parties understand consciously that this is the process of getting good at go to market. Then I think everyone's got a lot more patience. It's when it's, when time's going time is passing and you don't really understand what the CROs doing.

Right. Because there's not, nobody's giving very good data. Yeah. They talk about their pipeline and you can see the overall end result and stuff, but, but you're not sharing You're not sharing any data about what's going on in the sausage making itself. That's what gets people uncomfortable, right?

Uncertainty. You, you know if, if you uncertainty breeds discomfort, right? And, and so my view is you fix it by being wholly more transparent. But you do that after you've raised the consciousness. So everyone understands what this process of sausage making actually looks like.

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You know, it, it actually reminds me of years and years ago. I, I worked at at Amex and one of our senior leaders dedicated a wall and she called it, you know, the failure. And you were literally, you know, in this beautiful building going up there with a marker and kind of writing down all your failures.

And I think some people were a little bit shocked and taken aback by that. , but what it forced you to do was to learn what you got out of that failure. You know, whether it was wisdom or, you know, eventually leading you to success. And it was, it was highly effective. But I think people just don't talk about, we tried this, it didn't work.

Let's you know, we tried it again and, and now you know, it got a little bit better result and now we've tried it again for the 10th time and we're successful and kind of that iteration process. Made public makes a lot of sense.

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I, I have occasionally heard marketing leaders talk about their mantras fail fast and. I go, Well, I'd rather your mantra be succeed fast. Right? But, but fa because failing is not to be celebrated. It's the learnings from failure are to be celebrated. And, and the problem is, there's too many occasions when there is no learning from the failure.

Again, either because it wasn't measured, there was no postmortem, whatever it is, it's just so many people that go through motions, this doesn't work. They move on to the next thing. Never slow down enough to, to basically take those learnings as a feedback loop, you know, to, to inform the next iteration. So so yeah, I mean, I get a little bit uncomfortable when, when I hear a val failure wall. But, But you were clear, Lupe, that you said that the real value came from the learnings out.

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Just make sure you've learned something from it. And I think that that was at the point of what you said. But Interesting. I yeah, I, I wonder how you know, how you approach kind of as you have the conversations with CEOs, how you approach, how do you bridge that providing data to somebody that is already kind of, has their mind made up?

How, how do you. Make that happen?

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Which, which, none of them, none of them would ever argue that that's the, what they're going through and, and they all actually find it kind of refreshing to see it captured I in this fashion. A and, and then when you say, The companies that get through these, this process of iterating the fastest and with the least amount of capital burned are the ones that have the best data to inform that iterating process.

Nobody argues it, right? So, so, so it, it's a matter of having them understand. How data can be really, really helpful to them. And, and, and it's not, it's not a big leap of faith. It's just simply, you know, pull your head out of the sand of the tactical stuff that's consuming every minute of your day for just 10 minutes, and step back and look at the picture, look at what's going on and think about it.

More as a, a process designer or a you know, organizational strategist or whatever, than than I have this long to do list type thing. That's of, of all tactical stuff. I mean people, a lot of people are smart and they're very able to understand this stuff. It's more a matter of just. Take a breath time out.

Let's look at it from this perspective. And, and I don't think it's hard to bridge that gap, by the way, going back to the thing about failures. The, the one other thing I meant to mention is the toughest part in my view of transparency and, and, and I mean in particular the transparency of acknowledging how this experiment's not working Cetera, is there are a ton of people in this world who are irresponsible with negative information.

Thi perfect example You know, a a, a public company announced flat guidance in the stock tanks, 30%, right? Oh, that's stupid. Stupid company. Same company was right. You know, maybe, yeah, maybe. Okay. Because of that future cash flows might. End up being a little less than what you thought, but it didn't go down 30%.

Right. The, the future discounted cashflow did not go down 30%, which is what should drive the value of the stock. So a and and board members can be this way, or investors, right? I mean, there's so accustomed to want to, to having everything painted with rose colored glasses, if you will. That it's new to have anybody kind of lay it out and say, here's the situation.

Right. You know dispassionately, here's the good, here's the bad. Or if you're raising money for, for crying out loud, you certainly can't talk about the stuff that you know is not working co. Cause nobody does that. Everybody just talks about the positive stuff. And, and as a result, I think, you know, people have become Conditioned and, and they don't know how to react when anyone starts sharing stuff that isn't completely positive.

And, and I view it as sort of this level of immaturity or, or irresponsibility on, on the receiver's part. So, so there is that kind culture, cultural inhibitor. To, to to getting stuff as transparent as you would like. And, and that's why I think trying to raise the consciousness of the process, this whole iterative process, then when an experiment, quote unquote, isn't working great, it doesn't really feel like bad news cuz you expect some of them not to.

Right. So it's, it's a way to To, to, to navigate the natural inclination of people to react badly to anything that's not positive.

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It's just not being called out and, and I think that's, that's an important thing. Transparency's great, but I don't think it exists to the level that everybody wants as well as The level that it actually needs to exist at.

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Yep. Yep. Mm-hmm. . And, and I think that's part of the problem with you know, coming full circle back to CROs and, and the classic short, short timeframe of CROs is, you know, a lot of these environments and back to your original point where, People think that's the silver bullet, right? Mm-hmm. things aren't going well.

Okay. Higher a cro. You know, that'll solve everything. It doesn't solve everything. Cuz potentially the reason things weren't going well was product, market message fit to begin with. Right. . Mm-hmm. . And, and, and it's just usually not safe. It, it's, it's not after the first couple weeks where, where on the job, where the CRO can legitimately say everything's messed up.

From that point on, it, it, it, in most companies it's not. To be as fully transparent as would be helpful to the process of improving the company.

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So, so that's sort of a, a, a binding element that establishes a certain level of patience. Then you should you should grill the CEO about the board members. You know what? Walk me through a board discussion. How's that go? What have you had to do what have you had to talk to the board about that wasn't, you know, all all rosy?

How'd they react? Are there any people you know better or worse than others? Because I do think, I mean, you know, there are certainly some cases. Where there's a changing of the guard and things do improve overnight and maybe you can give that credit to that new person. Right, Right. But that's very rare.

Lost. That's right.

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And of course, you know, you're, you're sort of counting on people telling you the truth, but didn't tell you the truth. That's right. Yeah, but, you know, it's, it's better than not asking you at least have a chance of getting some information if you ask. So, so, you know, that's certainly one of the things I would do.

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Right.

If everything was working, why, why spend the extra two to 700,000 bucks?

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Kind of here's interesting anecdotes about what they're doing that's successful, what's not, That sort of thing. It's, it's pretty interesting. Mm-hmm. . Mm-hmm. . And then the data room. Is it, it tends to be more of a filibuster by me specifically around topics related to revenue operations and particularly the tech stack.

Go to market tech stack and go to market analytics. Right. Cause I mean, our, our company is all about helping. These early and growth stage companies get more effective at go to market by better leveraging the tech and data. So, so that's what we, we talk about. I mean, there's some. You know, we don't do a lot of 'em because we try to make sure they, they, they have useful value to them.

So when, when we do we would encourage people to listen cuz they usually have some helpful stuff.

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And thank you for being on and sharing your wisdom and I'm sure the audience is gonna find this all really, really valuable. So we appreciate your, your time and your, your expertise.

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This episode was digitally transcribed.

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