Earlier this year, Cisco announced its surprise acquisition of application-monitoring company AppDynamics* just before the company was set to go public. But what’s less understood is how the company built out such an effective sales force, which led directly to quick revenue growth. It’s one reason, I believe, the company was such an attractive acquisition target.
My team and I had a chance to catch up recently with Dali Rajic and Chad Peets, two key executives who helped build the go-to-market machine at AppDynamics. Dali became the company’s chief revenue officer in 2016 after starting as the VP of West Coast sales. Chad, the CEO of sales-focused search firm Peets & Associates, worked closely with Dali and his team and played a major role in enabling the rapid headcount growth at AppDynamics, specifically in the sales force. Their lessons on whom to hire, how to hire, and how to organize and incentivize a growing sales team is instructive for any software company looking to hit massive scale.
In the first part of our interview, we focused on the process for hiring sales reps.
What was your hiring profile for a software sales rep?
Dali: It was pretty simple: I’ve found [Tweet “the ideal profile for a sales rep is intelligence, character, coachability and experience.”]
Experience was least important because we knew we could teach. In fact, we stayed away from too many deal-specific, relationships-selling reps because that is just not how a scientific sales model can scale.
How do you read a resume?
Chad: When somebody worked for a company is relevant. Did they work for a company in its heyday, when that company had quality sales leadership? Oftentimes, recruiters will look at a company’s exit and say “well, this company got acquired $3 billion so they must have great sales people.” I don’t look at it that way. I will look at a company and say I know this company had a great sales organization. I know they were metrics driven. I know they had great sales leadership even if the company didn’t have a great outcome.
For certain companies, if you went to them in the later stages of your career I would question how hard you want to work. If you went there very early in your career, that would make sense. That’s a great job out of college.
Are you bringing somebody in who is used to moving pieces around on a map? Or are you bringing in somebody who is used to actually going out and leading the troops from the front? [Tweet “When you’re a small startup, you can’t have a general who sits in his tent on the mountaintop”] and is moving figurines on a map. [Tweet “You have to have a sales leader who will put the knife on the bayonet and run down the hill.”]
It isn’t just the leading from the front, but the science and the methodology. Is this somebody who’s operating based on gut feel or what they’ve seen? What’s the science? What’s the model you’re going to build? How are you going to make sure that as a CEO, I’m confident that we’re building a scalable model versus just “chasing deals?”
What was your hiring process like?
Chad: You have to know the profile of what you are looking for, but it still needs to be part of an entire program. Some companies will call and ask, “what profile have you been hiring to at AppDynamics?” And after I say it, they’ll go “great! Let’s go hire those guys.” But it doesn’t work like that—there has to be a program in place to make that person successful–and I think a lot of companies miss that.
One of the things I lead with when talking about AppDynamics is development. If you start talking to (people) who have been selling for a long time, have been very successful, and have been doing so based off of their relationships, oftentimes what you’ll find is that they aren’t really interested in being developed. Their perspective can be “look, I’ve got this career. I’m a great sales guy. I just want to go make money.” You have to understand how to sniff that out pretty quickly, because that individual is not going to be successful in a program like this.
You have to find the individual that says “It’s very important to me to continue to grow my career. Of course I want to make money, but I want to continue to get better.” That doesn’t just mean upward mobility—most of these folks want to have the opportunity to get promoted, and that obviously comes along with growth. You want people who respond to our pitch around investing in their craft. The right people will be immediately attracted to that, and the wrong folks will quickly bring it back to money.
I’m able to pretty quickly weed out a lot of folks. As Dali mentioned, we don’t focus as much on any specific type of experience, but I will ask if you have a track record of turning prospects into customers. That does not mean selling your company’s newest product into your installed base. A lot of folks think that’s hunting, but the motion is very different when you are talking to someone who has never heard of you.
Dali: People think that talking about money is sufficient, but it is not for top performers. Top performers know they can do well wherever they want. The culture of teamwork that you build so people can feel protected is very, very important. That is the human aspect of sales that many leaders miss. When somebody knows that they’re protected, they’ll take some risks. When somebody knows that you will invest in making them better and they have that aspiration for continuous improvement, it is very appealing when you give them a vision of what they can achieve here.
The other thing that a lot of startups I’ve seen do is bring on “guns for hire”, if you will. We stayed away from that. We hired people who wanted to legitimately build and create something, and who knew it started with small wins. It wasn’t just about the quick instant gratification, but building toward something better.
Seeking that out during the interview process is critical. When you are creating territories where none existed before, you will test even the strongest of characters. Especially when you’re doing it at a pace.
Chad: The danger with these “mercenary” types is that if they are six months in and don’t see the money, they’re going to quit. [Tweet “You need to build loyalty and find people who take pride in their craft as a salesperson”] They will stick with you longer.
Dali: My turnover over the last five years on average has been somewhere between 10 to 13 percent, which for a high-growth software company is extremely low. It is what has allowed us to build that sense of team and loyalty. People didn’t always make their numbers. There’s a lot of hard labor, some dry years, and some very good years. Not building culture from the ground up is a big miss.
The key thing that I always looked for (in candidates) was proving that they’ve built something in their career out of nothing. Look at what they’ve done that makes them unique. Have they had any true challenges or obstacles they’ve had to overcome in life? How did they overcome and what did they learn from those experiences? How do they self-assess themselves? I find that last one is always an interesting question because you can see who truly understands who they are and who just gives you the “interview answers.” If they self-assess, then they’re coachable and they’re trying to get better.
People will put on their resumes great things they’ve accomplished. We’ll dissect what their role was and ask for specific lessons learned. We ask what skills they’ve honed in specific jobs. We ask about leaders and what impact those leaders have had in their lives and careers to see how they learn. How quickly do they internalize information?
We also make them present our company’s presentation back to us. We’re trying to figure out if they are memorizing material or if they are truly internalizing. If they’re internalizing, it gives you an insight into intelligence and quick thinking. Can they really help customers solve problems?
How many candidates do you interview before you make a hire?
Dali: Chad would filter candidates before they ever got to me. That takes away 70 percent of the noise that’s out there, which is a pretty big drag for a lot of sales leaders. I’ve seen a lot of my peers do all the interviewing themselves, and at some point they get tired and exhausted. They start settling on the profile. It becomes “good enough” versus “we are looking for great candidates.” So you have to have that filter up front. If you don’t have it, it will wear you down.
With Chad, we knew we would get somebody who was qualified. I would do the first call, and if I liked what I saw I would pass them on to the actual hiring manager. Then we would also let the candidate interview with another rep. You have to give a little bit in these interviews, and you can’t just demand that they give you preparation and give you answers. You have to give them a snapshot into who the company is. What we would also usually do is have someone on the technical side have a conversation with them as well, because if they’re a good rep they’re going to want to know if this technology is really good and solves problems for customers.
So it’s a long process of five to six meetings, but it’s such an important decision for the candidate and for us that we make clear why we are a little bit more intense and probably have more steps in our process (than others). We want to educate them, but also let them educate us on who they are. We want them to know who we are, how we run, what our DNA is, what our culture is, and what they can achieve here. The process also gives us an insight. Is this an analytical rep? If they are, they’ll appreciate the process. If they’re not analytical, and they’re gunslingers who make decision off the cuff, those are also people who quit quickly and won’t be able to take all the challenges that a startup puts in front of sales professionals.
Chad: Process is number one. You need to have one, and get candidates through it quickly and efficiently, which Dali and his team do a great job of. Even with five or six meetings, our goal has always been to get a candidate through the process in three weeks or less because the market is so competitive. If it takes four to six weeks you will lose people.
One other thing I should note: the first 30 minutes of every first interview is selling the candidate. If you don’t have somebody up front qualifying the candidates, you may feel like you need to spend 30 minutes making sure this guy is even worth your time. Dali and I have worked together for so long that he trusts that a candidate I bring him is not a waste of his time. So, instead he takes the first 30 minutes making sure the candidate is fired up and excited about AppDynamics. What you’re really doing in this competitive market is earning the right to qualify that candidate further. That is a critical first step that I think most companies probably do not handle correctly.
*AppDynamics was a Battery portfolio company. For a full list of all Battery investments and exits, please click here.