Aaron Ross of Predictable Revenue

Founder Coffee episode 003

Aaron Ross of Predictable Revenue

I’m Jeroen of Salesflare and this is Founder Coffee.

Every two weeks I have coffee with a different founder. We discuss life, passions, learnings, … in an intimate talk, getting to know the person behind the company.

For this third episode, I talked with Aaron Ross. Aaron became world famous as the guy who set up the sales organization of Salesforce. He wrote a book on the subject and is now running a consulting company that helps companies with their sales; both called “Predictable Revenue”.

Aaron has 9 kids, 3 dogs, and more than 40 employees. We talk about how he manages his busy life, about having an ID forging business, and — obviously — about how to organize sales more effectively.

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Jeroen: Hey Aaron, it’s great to have you on Founder Coffee!

Aaron: Yeah, I just wish there was some actual coffee as well!

Jeroen: Well, I do have have some coffee right next to me for our chat. What about you?

Aaron: Going a little slow on that, but I’m going to get it right after! I do like it.

Jeroen: So, Aaron, you’re the founder of Predictable Revenue. For those who have not been on this planet for the past few years, what is it all about?

Aaron: Predictable Revenue started as a book actually, which came out in 2011. The book was about how when I worked at Salesforce, way back when it was small and had a couple hundred employees, I created an outbound sales system that helped them almost double their revenue growth.

After few years of leaving Salesforce, I wrote the book and I guess they now call it the Sales Bible of the Silicon Valley now. The book is getting translated in different languages for different markets — Portuguese in Brazil, Mandarin in China and more. We have even had a sequel come out!

Now, I have a company around what the book does. It is basically an outbound success company that helps other companies trade results effectively, for a faster revenue to outbound prospecting.

Jeroen: Actually my wife is a Brazilian and I heard that in Brazil, it’s already huge. It’s a bestseller!

Aaron: Yeah, it’s a big thing in Brazil. They are going crazy for it. So after the US, our second biggest business is in Brazil. There’s a separate unit there altogether and I absolutely love the place.

Jeroen: That makes the two of us! I even spoke to one of the guys at Salesforce, about a month back. He really wants to set up a business around Predictable Revenue because it seems that the kind of selling presented in the book, is really not known in Brazil and you are the ones introducing it.

Aaron: Yeah, most of the world wants to do that. So for example, one of the key ideas is… we’ll get to outbound prospecting, but let’s start something even more fundamental — sales specialization.

In the book, it was the first time that someone came out and said, “you have to specialize your sales people if you want to be able to grow and be successful.”

What this means is that you need to change the way you imagine a typical sales person. For hundreds of years, a salesperson has been doing the prospecting, closing the deals and even handling customer accounts. But with the rise of inside sales and big data, things have started to change in the last 10 years.

In sales, you divide and conquer. You have many different jobs for the sales team, so you hire different skills and make them work together. You have prospectors who do the prospecting. And that’s all that they really do. They generate leads for closers or account executives and sales people who will get customers to sign up. Now that’s all that this section of the team does.

There could also be leads coming in from your inbound marketing campaigns. You could have a separate role for inbound lead responders or junior sales reps. Their job would be to qualify or pre-qualify and pass the account executive the leads who are most likely to sign up.

Then comes the last type of role in the sales team. This would be after the customer signs up and there’s actually different kind of roles that come into play here — account management, customer success or professional services.

The idea is again to have a team approach to sales with different roles. Working together is the new idea of sales, really. Now most companies around the world, like in Brazil, don’t follow this. The model they still follow is of the sales people doing everything. Now that the market has read the book, they are looking at a sales team in a different way.

I can’t tell you how many notes I have gotten from people who read the book and implemented this in their sales team. They’re like, “I did that. I specialised my sales people and it has doubled my results!”

Jeroen: Doesn’t this then make the actual sales roles a little boring?

Aaron: I would say that for most people, it might be a boring job. But for those in sales already, they are overwhelmed doing five different jobs together. They just end up doing each one of them poorly and it hampers their overall performance.

No one likes to struggle. So when you refocus them and they can do fewer things better, it helps them stay on track and give it their best shot. It gets them closer to being an expert in that area. For instance, if I’m a closer, then I become an expert at closing leads and if I’m a prospector, then I become the expert at prospecting quality leads.

There are several reasons why businesses should follow this new sales model. Now there could of course be exceptions too in this case, where you just have to take one or two calls. In that case, one sales rep can definitely do the task.

But the book primarily talks about B2B sales. In all B2B sales, specialization is the way to go and there are a few reasons I can give for it. First, people just aren’t that good at juggling a bunch of different tasks. Most heads of sales complain about their people not being able to prospect well. Well, it is not because they don’t want to do it. It is simply because they are burdened with way too many jobs. Give them one or two tasks at a time, and then see them perform.

For instance, when you ask your most senior team members to do sales for you. Them making phone calls is like the most expensive of resources you could be setting aside. Not being able to close as many leads, is only going to bring down your company revenue. That’s the first reason why you hire sales reps to take care of this end of the job!

Another reason why this model works, is the sales measurability. When you specialise your team and break them into different jobs, it becomes a lot easier to understand what is working and what is not working. You can see the outbound prospecting, how it is working, how does the closing of leads happen, how are the accounts handled, how an inbound lead is responded to — all as separate events.

When you have your sales people doing everything, all you can see is, “Okay, John is not doing too well.” But you really can’t see why he is struggling!

One of the biggest reasons why the new model works is because it keeps the team happy. When you specialise people, they have a chance at becoming an expert at what they do and that feels good. This also simplifies the hiring, as you’re looking for a good rep to join the team to do a specific task — not a unicorn who can do all the magic all by himself!

Jeroen: Yes, I think employee satisfaction plays a key role in sales success too. You were at Salesforce, in what position were you?

Aaron: Well I started out as the most junior executive at the company — an entry level job of answering the 1–800 line. That was the only job they had in sales. The only person who would work under me, was an intern. Honestly, I wanted to do this job.

I’ve been the CEO of an internet company. We had raised five million dollars in funding. The company ended up failing and one of the reasons was that I as CEO, didn’t understand how to build and manage a sales team — a professional sales team.

I had hired a VP of sales, but I had abdicated my understanding. I didn’t delegate, so when sales weren’t working, I didn’t really know what to do. So I was like, “I have to work in sales to know sales, if I’m going to start another company.” We are better than Salesforce, and the only job they had was the website responder. We now call it market response rep or inbound SDR.

Jeroen: Basically you had a startup and it didn’t work out. That’s when you decided to take the lowest job at Salesforce, where nobody was doing sales and you built it into a very successful sales system.

Aaron: Close. Yes, I wanted to take a job there to learn sales. The only job they had was that a junior one. So I was like, “Whatever. I don’t have any ego about it, I just want to learn.”

Salesforce was very successful already. But there was something that Salesforce wasn’t doing too well yet. They had tons of leads coming in, like thousands a month for small business customers. They’d just built an enterprise product, hired and spent a ton of money on experienced field enterprise sales. Despite all the inbound lead generation and Marc Benioff — who’s brilliant at public relations, we weren’t getting enough enterprise or mid-market leads. It just wasn’t penetrating.

Instead of waiting for a solution, what I did was have a little chat with myself. “I see the problem. We’re getting leads but not enough sales. We have hired the most experienced sales people out there and they are helping bridge relationships with customers, but they’re not bringing anything in and they’re struggling.”

So I decided to take a crack at creating an outbound prospecting process — a simple, yet effective way to prospect for appointments.

I had never done prospecting before, but I could tell that we weren’t doing it very well. I was like, “I don’t know how this works but I know what we are doing, is just crap.” I read a bunch of books and then tried some things. I really didn’t like any of it. But ultimately, this is where I wrote in the Predictable Revenue book, that I started using email prospecting more than phone.

Get them to respond back, get appointments and it created a whole system — accounting management system, email metrics, everything. The idea was to generate as many appointments as we needed at these medium and large scale companies to fill our sales pipeline with sales people. That was the outbound system we created from scratch at Salesforce and wrote a lot about in detail in the Predictable Revenue book. Now we help companies build their own teams to do this too.

Jeroen: You created this whole system at Salesforce; at what point did you figure, “I’m going to make a book. I’m going to start a consultancy?”

Aaron: Here, not to digress too much, but I have a big family now. I have nine kids, three dogs and then we got to foster some other kids as well. I actually had zero kids. I only got married seven years ago. What’s interesting is, I left Salesforce in 2006. I spent a few years thinking, “I don’t want to do sales consulting. I don’t want to do that.” I did it enough to sort of get by while I worked on some other projects.

What ended up happening was I knew I wanted to do a book. I actually had a book offer before, but it didn’t feel right at that moment. In 2011, I got married and my wife had a couple of kids from her prior marriage, and she got pregnant right away. So that year, we went from zero to three kids or two kids plus one on the way, and I still remember this moment where before that, I didn’t really have to make a lot of money as a single guy. And I never really had expensive tastes.

I didn’t have to make a lot but I remember this moment was like, “I have a family coming.” I’m like, “Oh shit, I need to make more money in a more regular way to support my family.”

We also needed to move to a bigger apartment, get more health insurance. Okay, that really lit a fire in my eyes to publish the book and to start doing more focused consulting around it. That was 2011 and in four years, I grew my own income almost 10 times, actually 11 times. From 70 something thousand a year to more than 700 to 800 a year. All from the book, “Predictable Revenue” and its sequel, “From Impossible To Inevitable”.

The point is, what I always look at is how do you make growth a system?

At regular sales jobs, you’re always like, “I’m not sure if I’ll make out my number this month or this quarter.” I didn’t like that uncertainty. I tried to make it predictable.

Ironically, my income today isn’t that predictable month to month. There’s other reasons for that but how do you make growth more of a system? How do you look at companies who have something and they want to grow, why do some grow and why do some struggle?

That’s really what I am thinking in my books and what I’m interested in, is to find out how to do few things but do them well. There’s always a thousand things that you could do better or maybe a million. We all have that. But if you can do only one or two, or say three things this year, what would those be? This is what interests me the most.

Jeroen: If you want to make your revenue predictable, have you ever thought about creating a subscription based model around your services?

Aaron: Again, I sort of have a unique situation where I can only work 15 hours a week. It used to be 25 but it’s even less because again, the family’s gotten so big. I’m in Los Angeles, so I roughly need to make something like $60,000 a month.

How do I explain? I would love to have a recurring model, but it just hasn’t been practical yet.

To do a recurring model, it’s like you have to choose your business and up until this point, consulting and services, that’s what we could offer. That’s what gets outsourced the most. But now we have a team and a business. I think it’s ready to move towards what we are calling the Predictable University.

Jeroen: How many are you now, in the Predictable Revenue team?

Aaron: Well, in the Predictable Revenue company, there’s about 25 or 30 team members. Then there’s another half dozen. We have a small team in Brazil as well. It’s small but we’ve done a lot to lay the groundwork for the next few years.

The way I think about it is and there’s a lot of people who are listening, who feel this way, which is sometimes you are in the fast growth stage but sometimes it plateaus — whether it’s a business or you as a person. You can be working on things to restart growth. It might be redoing a product or redoing your team. It might be redoing your personal life in some way. You often times are planting the seeds to grow, but you may not see the results for quite some time.

For example, my income has been a straight graph in the last two or three years. I am investing in a future — it could be writing another book, creating a product or simply growing my team — but it’s something that I believe in. As long as you feel like you’re doing the right thing, it is going to work.

Jeroen: If you are trying to limit the amount of time you spend on the business, how do you manage the fact that it’s so linked to your name as well?

Aaron: I have a bunch of great partners and a great team. There’s no way I’ll have people sign up who wouldn’t work with me on something ‘together’.

I’m more of an author at heart. We’re looking at updating the Predictable Revenue book in the next year or so. There’s a book I did with Jason Lemkin of SaaStr, called ‘From Impossible To Inevitable’. I’ve heard a lot of people say it’s the best book they’ve ever read.

For me the way I do it is, I want to build a reputation and a brand, and a set of ideas that really connect with people. But then, I would also want a team around it. I’m okay working more slowly in some ways, than try to work really fast all the time. I’m okay investing in things that will take a year or three years to pay off because I know they will.

I can say it’s taken us a few years to get to this point where I work like 15 hours a week. I really can’t work more between watching kids at home and my wife is gone a lot. She’s doing a lot of singing. I’m managing all the kids a lot of the time and supporting the family. I found a way to do it. It’s not always easy, just like parenting is not easy but it works.

Jeroen: Got it. Have you always known that you wanted to do something in sales or is this something that only grew on you after your startup failed?

Aaron: I never knew I wanted to do sales. I don’t think that I ever imagined to be a salesperson as a kid.

Jeroen: What did you want to be?

Aaron: A pilot or an astronaut. Then during college, I was looking at computer programming and then my interest shifted to civil engineering. I didn’t really know what I wanted to do. I did civil engineering at Stanford and then I did investment banking for a couple of years. Simply because I was like, “That’d be interesting,” and it was for a while, then it got really boring.

Then I went into software. At some point there, I realized I wanted to be an entrepreneur. No one ever asked me what I wanted to do, until I had to complete an application for the Stanford Business School. Till 26, I never really thought about an answer in a very focused way.

I remember specifically filling out that Stanford Business School application, “What do you want to do with your life?” I was like, “Oh well, I want to be an entrepreneur.” That led me to starting a company, which then led me to a company failing and then I was like “I really need to know sales”.

Jeroen: Did you have one startup before Salesforce or multiple?

Aaron: One internet startup. I’d done some other small businesses at college; like a painting company. In high school, I created and sold fake IDs, so I was a forger. In the United States, to buy alcohol you have to be 21. A couple of those things when I was younger. But the first startup would be the internet one, before starting work at Salesforce.

Jeroen: You never got caught as a forger?

Aaron: No. It was partly a way to make a little money, partly a way to be able to buy alcohol, and partly a way to make friends because I won’t say I was anti-social, I was just shy in high school. I had trouble making friends, but I was good with computers.

Jeroen: Why do you think you were into startups? Why did you want to be an entrepreneur?

Aaron: My father was an entrepreneur. So I guess that played a big part. If anyone listening to me right now, is in their 50s, or maybe 40s, they might have heard of Ross Systems. In the United States, it was a big financial budgeting software company. It’s actually still around.

It was sold to a Chinese company. It has been bought and sold a few times, but he started that when I was born basically. That’s where I got my original inspiration and then after doing it for a while, I was like I enjoy it.

I got a lot out of Salesforce, in terms of learning. It was a struggle though because of working for three months out of the year, I’d be inspired just to create something and then nine months I’d be plotting along in Salesforce. I learned a lot about politics and internal working. It was a great way to get paid to learn.

I think any job if you look at it, can be a great way to get paid to learn. So don’t complain about your job, be like, “Wow, you have an opportunity here.” I was glad to go back out on my own after Salesforce and start doing my own thing.

Jeroen: Do you still feel like you are getting paid to learn by your own company then?

Aaron: I try to. There are periods where I can feel that way when there’s something new. But then there are definitely times when it’s more of a grind. That’s partly because of the limited time and energy.

Even last night, I slept a few hours but the baby was sick and so even today, I just kind of feel like crap, like physically, I feel like crap. No matter how much you love your job — and I love my business — in terms of kids, love has a different definition now. I wouldn’t say I love my job. I love my kids, which is just beyond describing. My business is great but there’s always days where it’s better than others and I don’t think that ever changes. I think when I was young and I’d see the people like, “If I just had a job I loved, that I could love everyday.” You may even have something you love, but some days it sucks.

You can’t avoid that in life unless you sit on the sidelines and do nothing. It’s better to be out there like an entrepreneur, whether it’s in business or in life. Take the risk of doing something new, fall flat on your face a few times and then learn to get up. Trust me, it is better to getting stagnated and sticking to one thing just because it’s comfortable.

Jeroen: What is it that you mostly do nowadays?

Aaron: I am mostly consulting. There are two main things in our business: one is outsourcing for companies who aren’t ready to do their own prospecting. Most in the US. The other is what me and my team do, consult with companies on how they can build their own outbound prospecting team for faster growth.

Part of that is me working with some clients myself. And a part of it, is helping companies go through the learning system of how to hire the right sales teams, how to prospect, what metrics to measure, how to configure Salesforce and other things. That’s really what I spend my time on.

Jeroen: Building Predictable Revenue, what is it that keeps you up at night lately?

Aaron: Lately, there’s not much.

Probably it’s just how to get things done. When you say I’ve got some number of hours and have some go to clients… It’s a little scary. I might have three or four hours a week of like real investment time, to improve work in the business, so I work on the business.

It’s like how to get more time to improve our internal systems — how we manage and track how our clients are doing, primarily. Then comes being able to coach my team and spend more time with them.

Jeroen: So currently it’s the process and coaching?

Aaron: Process and coaching, yes.

If our team is in place and we have our tools, things will go great. But if we miss someone, if there’s no communication, we will definitely struggle in some way. The team communication is so important.

Also, I live in LA alone and almost everybody else is in Vancouver. There’s like 20 something people in Vancouver and I’m sort of on my own here in LA. That just creates a little extra challenges around team communication — especially on what’s happening. So team communication and our progress, is what keeps me up. Sometimes, I feel I am not at the top of things as much as I’d like to be.

Jeroen: How does that work exactly? Are you like the face on the screen that is always there in the meetings or?

Aaron: I try to attend as many meetings as I can. But there are so many that it becomes difficult. There are a lot of people in our company, that I haven’t even met.

I try to attend our sales meetings, where the whole team groups. Also, when I go onsite with customers, I make it a point to bring along one or two new people from the team. In fact, I’m actually going to China next week. We have a fast growing SaaS company in China that has hired us to help them with outbound prospecting and improving inbound lead generation and churn reduction.

I’m going to take two people from my team. It’s like their training period. They are not coming to help me out; they are coming so that they can see what it’s like to be onsite with the client and see me work with them.

Jeroen: What do you think are the main skills that you as a founder bring to your business? Is it like the coaching aspect that you are referring to or something else?

Aaron: One of them is like a deep expertise in this area of outbound prospecting and specifically building teams to do it.

We’re into the outsourcing business, which I don’t have much experience in. So the co-CEO takes care of it. We work together in these areas because they are very complimentary.

I think my role is more around defining what we’re going to do in the long term. What are we doing in the next few days, weeks, months or 5 to 10 years? My co-founder, co-CEO, is good at more of the 3–12 months planning on how to run the company.

There’s lots of things I’m not good at, but I think it’s more important for the things I focus on. I try and be really good at those things only. With that whole book, it’s basically focusing on your strengths and not your weaknesses.

Jeroen: What are these things that give you energy, these strengths?

Aaron: Well let’s talk about energy for a minute because with the nine kids, eight live at home and there’s some young ones. There’s a baby who’s 1, there’s an almost baby who’s 2. Most of the other kids are relatively self sufficient, but … do you have kids?

Jeroen: No, not yet.

Aaron: Well, when they are under 1 or 2, it’s a lot of physical work holding them. I mean it’s intense. Driving the other kids around, it’s just a lot to do. So we do have a nanny that comes in, but the bottom line is, I’m pretty much always tired and have been for years.

There’s never enough sleep, even if I have time at night. I mostly use that time to write a blog post or catch up with work. What I found is, before I had kids, I would get inspired and write. After babies and kids, especially the last few years, I rarely get inspired anymore, because I’m just always tired.

What happens is, how does it work? I’m up from 06:00–06:30 in the morning to late at night. And then come the deadlines. That’s where I get my energy! I know I can’t escape deadlines. It’s just something that I absolutely have to do — including publishing a book publishing deadline, a conference deadline, a newsletter, …

That’s where for a while, I’ve really relied on extrinsic motivation or that outside motivation, where I have to get things done, regardless of whether I’m tired or not inspired — because, I have to. Think of it as ‘forcing functions’. This is in the “From Impossible …” book!

But think about it, if you want to get into shape, what works better? Do you sign up for a gym, or do you sign up to do a marathon and tell all your friends you are going to do it?

Jeroen: The marathon. I have even done that a couple of times. The problem with marathons is I tend to overtrain and then that doesn’t work either.

Aaron: Yeah, you got to know yourself at some point. I don’t want to say weaknesses, but things we know we have to do or we shouldn’t do but we do them anyway. That is where I get the energy from because I may not have the time to rest for another year or two, until we don’t have any babies who are under like 2.

Jeroen: The way you deal with it, is chasing deadlines basically?

Aaron: Yes, that’s how it works for me.

Kids have to be at school at a certain time, my wife leaves at a certain time for her music classes, that’s a lot of time being very defined.

But then there is one thing that I haven’t been able to do well — putting time aside for myself. Like I haven’t worked out regularly in a while, although I do move around all day. To do even the smallest of things, I have to put it on my calendar. If it’s not on the calendar, it just doesn’t happen. I have to like block it out ahead of time!

Jeroen: You very consciously decide: “this is family time, this is me time, this is business time” and then there’s these deadlines that keep you awake?

Aaron: Yeah. I have my routines, so the days and the weeks are usual. But it’s the calendar that drives a lot of this — even daily activities like the routines around school, business or personal deadlines for tasks.

Jeroen: What is your long term goal with Predictable Revenue. What do you want to achieve?

Aaron: We want to be the number one sales brand in the world. We want it to be a brand that helps inspire people to learn how to make more money in ways that feel good. Because sales, I think deservedly so, leaves a bad taste in many people’s mouths.

Even as a life skill, if you don’t know how to sell yourself an idea or product, you are not going to accomplish anything in life really. Whether you are trying to start a non-profit, get a promotion, get a job or start a company. It’s a life skill!

Our other goal is to create a culture in our own company that’s really very innovative and I would say, humanistic. People get paid to learn. We want to groom the future entrepreneurs and inspire people to do their best.

Jeroen: When I asked the question you were able to answer pretty quickly. Is it a mission statement you have written down somewhere?

Aaron: Yes, we’ve talked about it. We haven’t written it down some place but we’ve talked about it internally. Apart from the two mission statements, we also have one more goal that keeps it all going — pushing people to do more than they think they can.

Jeroen: Cool. Slowly wrapping up… What’s the latest good book you’ve read and why did you choose to read it?

Aaron: Well, what’s funny is that I haven’t read any business books lately.

Jeroen: Any other books is fine as well.

Aaron: My wife and I are really into reading Shakespeare and the theories that Shakespeare didn’t write.

All the plays attributed to Shakespeare and a woman named Emilia Bassano, who we now believe just from reading books, is the most likely person who wrote, or who was the leading author because there’s a lot of collaborations on the plays.

Whether she collaborated with Shakespeare or not, who knows.

Jeroen: Why did you choose to read these books?

Aaron: My wife got me into it. She’s really obsessed with it! If you haven’t even heard of this already, the fact that Shakespeare may not be the author of his plays. It’s called “Shakespeare’s Dark Lady”. There’s also a site called The Shakespeare Authorship Trust, that you need to check out.

They list out why people think Shakespeare didn’t write the plays. I don’t know, it’s just interesting to see the theories. It’s just like a Sherlock Holmes puzzle to circle back and piece through like what really happened and what you believe. That’s been our obsession lately.

Jeroen: That’s funny. Actually, the last book I’ve read was when we were in Brazil over New Years and bought this huge collection of all the Sherlock Holmes stories and I’m now in I think 60%.

Aaron: Yeah, you picked some great ones.

Jeroen: Pretty nice.

Aaron: Yes, do you speak Portuguese or did you pick it up in English?

Jeroen: No, I pick it up in English. I’m studying Portuguese and it’s going pretty well but I’m not good enough to read Sherlock Holmes in Portuguese. That would be crazy.

Aaron: I love Sherlock Holmes. I have one of those compilations some place. You can never go wrong. I heard he was the character that most movies were made out of.

Jeroen: I really love the one with Cumberbatch.

Aaron: Yes, that’s a great one.

Jeroen: Anyhow, last question. Is there anything you wish that you’d have known when you started out?

Aaron: I mean… how much time do you have?

If there’s one thing I’d like to point out, is what a positive effect your real friends and family can have on your growth.

A lot of people think that having a family while starting out is a burden or a distraction. It doesn’t really need to be. It can actually be a huge help and support, and the motivation you need to keep going and be more successful than you could be on your own. I really want people to start appreciating those they have around them.

Jeroen: I fully agree with you there. Well, thank you for the super open conversation and thank you for being on Founder Coffee.

Aaron: Thank you for having me, Jeroen.

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Jeroen Corthout