As the Chief Revenue Officer (CRO) of Freshworks Jose Morales is responsible for all revenue that comes into the company. He has spent 10 years building and leading field operations at Atlassian. He was involved in direct sales, partner programs, services, and other key functions closing in on seven-figure deals for Global 2000 companies. Jose joined Atlassian when it was less than $100 million company and he helped the company grow to $1.8 billion in annual run rate. Before Atlassian, has worked at startups and large enterprises in leadership roles.
Jose talks to us about his sales philosophy and his journey to sales. He also talks to us about how a startup can build and scale a modern sales engine, what they should look for in sales leaders, how they can build sales teams and incentivize sales reps to create happy salespeople.
Q. Tell us about your sales philosophy and how it has evolved since you joined Atlassian ten years ago.
Jose: When I joined Atlassian it was sub 300 people. What made Atlassian interesting was they sold low-cost products online in a simple way where users could try and buy the products. They were successful at this because it was a ‘land and expand’ product. They were selling to technical people, engineers, and product managers and they were one of the first companies that consumerized enterprise software. The product didn’t need to be sold at the C-level or to Vice Presidents but could be sold at a team level.
What allowed Atlassian to grow was that the online purchasing process was as simple as possible. Even though there wasn’t a full-fledged sales team they had people who were able to help with customer queries whenever they came up. And I think that’s a great model for a lot of companies.
Entrepreneurs should figure out what their customers need and then see whether they can drive true product-led growth. Think about your product and what your customer’s experience needs to be to adopt it. That will also help you think through when and if you need sales. Generally speaking, most companies grow into doing bigger and bigger transactions, and that’s where sales is critical. But if it’s a small, affordable, departmental level sale that’s perfect for doing things efficiently online with people who can help prospects when they get lost.
Q. When should a startup look to hire its first salesperson?
Jose: The first customer or the first couple of customers is usually driven by the CEO, lead engineers, or lead product managers. They need to find those customers and get deeply involved with them. Once you sense that you have product-market-fit the next thing you need to figure out is what type of sales model do you need? How much are you selling the product for? Is that a lot of money or a little money for the customer? Is it easy to adopt or does it need a lot of customer success or professional services to get going? These factors are going to drive figuring out if you need a salesperson, and then what type of salesperson that you think you need.
For example, if you start getting a lot of inbound interest, you want to build a process and a model to help those customers. That model can be built online, it can be a simple inbound sales team, or that model can include more of a traditional sales organization that can do a little bit of inbound, and also try to go find the personas that they want to target.
You really need to look at your product line and where you think your highest probability of success is, think about who the buyer is and think about how complex that sales cycle is. That should help you think about what type of salesperson you need and when you need to hire them.
Q. What are the traits founders should look for when hiring a sales leader?
Jose: There are different types of sales leaders. There are sales leaders who excel at helping you sell the big deal. A lot of software companies with a higher deal size will have this type of leaders in the early stage. These leaders are inspirational, really good with the customer, and understand the actual sales process. But a lot of these leaders aren’t good at planning things like: How many sales reps do I have? What’s the quota going to be? How many transactions do I need to get done?
If you have a complex sale and want to build an inside sales machine then you need a leader who is organized and excels at the sales process. A leader that’s good at thinking, How many transactions need to be done this month? How many can a sales rep do? How many reps do I need? How do I need to train them? How many calls we have to make? How many leads do I need to have come inbound? You need someone really operational
Thinking about what are the deal sizes you need and the missing skills that you’re trying to compensate for will help you identify the right sales leader.
Q. What is something you’ve learned but is contrary to the regular advice we receive on sales?
Jose: What I learned early in my career is the power of no. Many sales organizations end up doing backflips and doing all sorts of things, which increases your cost of sale and makes your customer contracts more bespoke while yielding the same revenue. Another lesson I learned that is particularly painful to startups is going after the big deal before you’re ready.
I ran a product line while I was at Atlassian in the early days. We really wanted this big customer. It was a great company. But it took us down because we were running a service and every time that they would do something, it would put so much load on our servers. We weren’t ready for it yet. It brought us down and destroyed the experience for all of our customers. You can get lost trying to service the huge company that wants all these special things from you. But then you stop being a software company and you start becoming a bespoke development shop.
Q. How should a sales leader go about setting up a sales team?
Jose: If you’re going to set up a sales team, the first things you need to be sure about are: Is it clear what they’re going to sell? How are they going to get leads? Do you already have inbound leads? Are you going to be running campaigns? If you’re running campaigns, you need somebody in marketing who’s doing campaigns. Are you going to get enough leads through marketing?
You need to make sure you have systems to capture all the data. Do you have that setup? Do you have a compensation plan set up? Do you have reporting setups? When you’re small, you may not need complex systems. The most important thing is to make sure that you have leads or a clear set of targeted accounts you want to go after. You have to train your sales reps. Give demos to your salespeople, and have them talk about the product back to you, do some role play and have them get good.
The most important thing is, figure out how many salespeople you need, make sure you have the systems and a sales process. Then make sure you train them.
Q. How do you incentivize your sales team?
Jose: There is a famous saying that compensation drives behavior. It’s true. Compensation can drive good and bad behavior. You need to make sure, however, you decide to compensate the sales rep, it’s in line with what is good for you as a company. There are many examples of sales reps, selling things that aren’t necessarily great for the company because that’s how the comp plan was set up.
The other thing is at the end of the day, depending on how much leverage the sales reps have, they want to have a good chance at hitting quota. If you set up a system where there’s no chance, they’re going to hit quota and no one’s making enough money, then they all leave. And it’s a huge waste of time.
Make sure there’s enough in there so that if they work hard, they have an opportunity to make money. No sales reps going to stay if they can’t make money.
Q. How do you deal with the laggards in your sales team?
Jose: There are a couple of reasons why people don’t make their numbers. Number one is they’re not a good salesperson, or they haven’t worked hard enough. Number two is they didn’t take the training seriously, or they didn’t understand it well enough.
Another thing that will happen at some sales teams is that when you hire more sales reps your existing sales reps will keep all the best accounts. You have to make sure you’re giving them a fair chance based upon what you do. The faster you get laggard sales reps to move on, the better off you are. My firm belief is sales reps who’ve been around for a while and grown with you sell better because they know the business better and they know the company better.