Welcome back to episode two of Sales Leaders Spotlight. If it's your first time listening, in this podcast series we speak with key players who are sharing their experiences and insights on the current sales landscape.

In episode two, our host, Joseph Fung, is speaking with Gary Swart, former CEO of oDesk (now Upwork), and currently, Partner at Polaris Partners, investing in technology companies.

In this episode, they will discuss leveraging AI automation to scale, frequency and competency in sales, and the future of work. Let's jump in.

Listen here:

Joseph Fung: So Gary, tell us a little bit about yourself, your history, who is Gary Swart?

Gary Swart:  Oh my gosh. Well, I don't know where to start, but it goes way, way back to when I was… I'm a recovered sales leader, so I started as a sales rep (actually now I think they call them a BDR), then a sales rep at AE and ended up managing and leading sales for a company called Pure Software.  Pure was Reed Hastings' first company.

Reed's now the CEO of Netflix and in his prior life, he was a geek at a software developing tools company. That company ultimately became part of IBM, so I went from an employee number 30 to employee number 131,000. (laughter) I realized I wasn't a big company guy, so I ended up back in the jungle — back in the jungle dirt road highway at a little company called Intellibank, that was Dropbox done wrong, and then, from there I ended up running company called oDesk, and oDesk was the world's largest online workplace and marketplace for talent. oDesk merged with the number two player in the space, a company called Elance and is now called Upwork.

Gary Swart:  So after that, I actually jumped to the other side of the table, as some people would say, and joined Polaris Partners as an investor. So I'm in the venture capitalist business now. We manage about 4.5 million dollars, the firm has been around for 20 years, and I'm a general partner here in San Francisco.

Joseph Fung: And you've got this fantastic history from being a sales rep to the CEO of a company and, in particular, at oDesk, have a unique perspective about the future of working in the workplace scene, just want to hear your thoughts on where do you think that future of work is heading?

Gary Swart: One high-level summary is, I think it starts with work augmentation. So it's making workers more productive. I mean, sales specifically is about frequency and competency, and we can talk about that a bit more in a minute, but how do you augment a worker so they get more done and so companies can get more done for less?

And there's a lot of studies that show that significantly fewer workers are producing far more GDP today than 40 years ago, so that's about augmentation.  It's about breaking work into smaller chunks, smaller bite-size pieces, people doing more and more specialized work. And ultimately it's about automation. 

Joseph Fung: And, like I said, there's a lot of thoughts, a lot of opinions out there about the future of work, and I think there's a lot of people who have talked about and blogged about how that impacts more routine roles or clerical roles. We don't always think about how that's going to disrupt sales and you've alluded to a couple of points in there, and I'd love to hear your thoughts on how those trends are going to impact sales specifically.

Gary Swart: Well, to your point, Joseph, there's sort of a continuum of level of work, right? So how easily can that work be automated? And for very small, repetitive, highly transactional tasks, I think it's a lot easier to automate those, right? So we can see this in work that's already been disrupted — where a human used to turn handles on a machine, now the automated machine can do that.  We're seeing that coming around in things like driving.

And so, I think the more transactional the task, the likely it is to be repeated.  In sales, it's historically been very face-to-face, or voice-to-voice, if nothing else. But I think we're seeing more and more automation of both the frequency, (what are the things that can help me to make more dials or reach more customers) things like automatic dialers.  You just have to dial the phone and leave a voicemail, now a machine can dial the phone and automatically select a voicemail based on the type of call. That's one example of making more dials in a day.

And then the competency piece — what do you say and do once you're on the phone with a customer? Do you have the information you need at your fingertips, or do you have to go find it. Things that can help with the competency, helping the reps say and do the right things once they actually reach the customer.

Joseph Fung: And I know Polaris is invested in a number of sales technology companies and marketing technology companies, we would love to hear your thoughts on any specific companies or technologies that you find particularly exciting right now.

Gary Swart:  Well we invested in a company called Inside Sales, people say, "Well, that's just an automated dialer". It's just an automated dialer with a massive dataset on the backend. And that dataset gives incredible insights and actionable insights based on who to call, when to call, why to call, that you couldn't normally get. So in other words, I know to call in Denver when it's raining or snowing because you're likely to get someone in the office. Or don't call in this city after their sports team loses, because you're not going to get anybody on the phone, and even if you do, they're not going to be in a good mood. So it's this data that never existed before.

Gary Swart: I was an advisor to a company called Outreach, and I think they're interesting in that they're helping with the frequency but also the competency. Taking best practices and repeatable best use cases and giving you the ability to replicate those from your best reps to your worst reps.

Gary Swart:  I invested in and advised for a company called TalkIQ. At the first, very basic level, they've automated note taking for sales reps. So this is really interesting because a lot of data doesn't get into Salesforce. Well, now it automatically gets entered in almost in real time. That data is searchable, indexable, and you can look to marketing to see who's on message, who's not on message, who is featuring new products and who isn't.  Sales management can see, "Why's Joseph closing more deals than Gary? Oh, because he's asking for the order and Gary is not."

Gary Swart: So it's this wisdom that you never had before and that results in real-time coaching.  So you're on the phone with the customer, you compete with HP, customer mentions HP, and up on your desk in real time pops a little dialogue box that says, "Here's how we win against HP".  

Any kind of application that puts the data in the hands of the person when they need it is really interesting.  Instead of having to hang up on the customer or search for and why, or bother the same people for information — have that information be right at my fingertips helping with the frequency.  More dials means more successful calls with customers, and the competency — helping me find the information I need when I need it, fast.

And then a dataset at scale. It's like Act One is the actual tool to facilitate the work, but Act Two is this massive dataset that doesn't exist without tools like Kiite, without tools like TalkIQ. So I think that those are interesting products with data at scale.

Joseph Fung:  You first started off with the two realities — frequency and competence and then you provided a couple of really interesting examples where the functionality started off with what appeared to be a frequency offering, but the real offering underneath the hood was driving towards competence and improving individual performance. Is it fair to say that you think the real winning strategy is balancing the two of them? Or is it more representative of the few companies you happened to mention there?

Gary Swart:  No, I think it's balancing. I think the real winners are the ones that are going to create this — the model in this kind of business is, in fact, the dataset.  It's the data that didn't exist before. That becomes the barrier to entry for other businesses.

So it's sort of like, Act One is the tools that going to help a rep or a sales team to do their jobs more effectively, and the good news is that customers — there's no exact business model there, so the customer pays you for the right to use that tool, which gives you the right to then get all of this valuable data, which becomes valuable to the whole ecosystem.

So it's a little bit of a Trojan horse with a data element at scale and that's really what Inside Sales is. People pay to use the dialer, but now they have this massive dataset and each customer's data benefits everybody in the ecosystem.

Joseph Fung: There's another question about how much competence is driven by the tools someone has, versus the membership or the management that they have. And definitely, the rule and the dynamic between employee and manager has changed over time.

Gary Swart: So I used to manage very large telesales teams. Couple hundred reps, right? With every large quota.  We were selling north of a million dollars a year for an Inside Sales rep. So--

Joseph Fung: Wow.

Gary Swart: This was at Rational Software, and we had a highly efficient and effective sales team.  I remember when managers actually used to sit on the phone and coach reps. It doesn't happen any more. It just--nobody has the time. Should they do it? Yes. Do the reps need it? Absolutely. But nobody does it. And so, why?  If you look at what you should be prioritizing as manager, it's hard, it's intimidating for the rep, and gone are the days where you're even getting customers on the phone all the time. It's not even like management has the information about who the actual decision maker is. Yes, they have something in Salesforce, but that may not be the person that they're dealing with at the account.  So I think it's just so hard nowadays.

Gary Swart: I walked into a sales environment not too long ago and nobody was actually on the phone. Everyone is typing on their keyboard. Some people were on social media, and I said to the VP, "Does anybody actually work?" Right? Used to be you'd walk into a call center-people were on the phone and he said, "Trust me, they're working." They're researching clients, they're emailing, this is part of the activity. And so the world has changed from where I grew up now to become more tool-enabled. But at the end of the day, I think most of the technology is focused on frequency and not competency. And the competency piece, I think, is really important.

Gary Swart: Why? Well it's so hard to hire good reps nowadays. It can take three, six, nine, twelve months before you know if they're any good. So you need a better way to figure out — is somebody on track, are they coming up to speed, are they doing what they're supposed to be doing, despite the fact that they're not hitting quota yet.

And I think many managers and leaders-flip a coin, 50/50 odds whether or not you hire someone good and if it takes you nine months to figure out if they're any good? You can't afford that. And it's not the money that you're burning on the ineffective sales reps, it's the opportunity cost of not having someone in the seat that actually can sell. And so I think we'll see a shift to more competency-based tools, more tools to measure and predict and to give you the tools to figure out if you're on track with somebody or not way in advance.

[bctt tweet="It's not the money that you're burning on the ineffective sales reps, it's the opportunity cost of not having someone in the seat that actually can sell." username="kiiteHQ"]

Joseph Fung: When you hear analysts talk about only 35% of a sales rep's time spent in front of a customer, forcing you to ask, are they spending the time researching, are they worried about calling a customer, are the current tools and seasoned information simply a distraction, what do you think are some of the things that we could be coaching sales reps to do to help them increase that number and actually spend more time with the customers?

Gary Swart: Well I think it depends on where a company is in their lifecycle. I mentioned earlier jungle, dirt road, highway — when you're in the jungle, everybody's got a machete in both hands, you're hacking vines, so you don't have a repeatable use case yet. You're getting your first customers, and they're going to need all hands on deck and you need people that are good across the entire sales lifecycle.

They're good at prospecting, qualifying, disqualifying and not spending time on things that aren't an ideal customer fit for you. You're good at differentiating ability, negotiating, closing. You have to have the full suite of tools and until you get that repeatable use case, you need people that are really good at the early stage, right? They're very consultative, they're very good at sort of sniffing out that early stage. Think of it as really blazing a trail. People who are good with machetes may not be good in a Jeep or in an Escalade on the highway.

Gary Swart: And so, as the company scales though, once you have sort of a repeatable use case or semblance, then I think it's more tool-enabled, more technologies, your process is more baked, your architecture is more baked, meaning the structure of your given market. How many BDRs, how many SDRs, how many AEs, what's the ration of BDR to AE. These things are not in place in an earlier stage company. So I think it's more about having the right people and the right tool at the right stage of the company. And as it scales, more automation, more process, more architecture to facilitate a high frequency go to market.

Joseph Fung: So your cons about tools and process, I think they resonate really well. Customers are always out looking for what the right tool is, what the next tool is. And especially in a software service environment, the lines are blurred between what's purely a tool and what's an outside service. And you've seen firsthand how companies can start to take work that was traditionally done inside the wall and actually bring that outside as a service. I would love to hear your thoughts on where do you think that line is going to move? And where do you think companies have the opportunity to leverage outside services more, especially in their sales function.

Gary Swart: Well here's the thing. I think it's just a matter of business model.  As a sales leader, if you have a problem or challenge with hitting quota, or hiring people, or getting work done, or something standing in your way of achieving your objective, let's call it a quota. You really don't care if it's a service or if it's a technology as long as it can be delivered quickly. There's a dip to productivity when you implement something new, you want to make sure that that dip is not too deep and that the curve is accelerated above what you were doing prior to taking on this dip in the first place.  So your time to value. And you don't care if it's a service or if it's a technology as long as the dip is small, and the productivity line increases at the end of it.

Gary Swart: However, the company running that business, they care if it's software-enabled or people-enabled. Why? Because the margins are better on a software-enabled business. So as far as the company is concerned that is the customer of the technology, they don't care if it's hamster-ware or brilliant sass as long as it's useful and usable for their users.  Now, with that said, I think companies want something that reps are actually going to use. This whole thing of selling high into a sales organization and deploying the technology to everybody only to have people not use it — that's a problem. "The selling starts the day you close the deal."

So you close the deal, now you have actually have to sell the usage. And I think better situated are the companies where the reps are dying to use their technology. They get it right away, the time to value is immediate, and then those companies start small, deliver value instantly, and then incremental value over time. And these are companies with negative charm.

Joseph Fung: You've got the chance to see companies that are performing well, companies that are maybe falling behind, but everybody has an opportunity to improve how they're doing right now. So you think about the sales leaders you speak to if you were going to encourage them to be, asking them one question or looking at one part of their business right now, what would you suggest they be digging into?

Gary Swart: Well I think it goes back to what I said earlier about the process, about architecture, and about execution. And when we're talking to a company who's trying to decide whether to invest or not, I'll often speak to the sales leader about those three things, and I'll say, "Hey, which of these things do you like doing the most? And where are you on this continuum? And tell me a little bit about each?" And for the sales leaders who can't speak to those things, I think what you'll find is very few sales leaders have all of these capabilities. They're very process-oriented, they're architecture-oriented, or they're execution-oriented and they don't know how to spell process. (laughter) And I think the very best organizations are the ones where the sales leader knows their shortcomings and they've augmented themselves with a sales-ops person who is process or architecture-oriented. And it's the companies that can articulate their metrics, they know their average sales cycle. They know their ASP, their average deal size, and they've got an idea of these metrics without having to be asked, right? I think that's where you know you've got somebody who understands how to go to market.

Joseph Fung: What about sales reps you see right now? When you think about a sales rep who's looking to build their career, maybe grow a sales team, what would be some of the things you might suggest they think about right now?

Gary Swart: I always felt like I had to run a little bit harder. My grandfather used to say, "If you don't have it in your head, you have to have it in your feet." And so I felt like I worked a little bit harder. I had a smart employer once who said — I told him about that quote and he said, "Well, I suppose the opposite is also true." Right? So if you don't have it your feet, you better be a little bit smarter and so I think it's a combination of both. I think it's looking around at best practices, see what are your peers doing that are hitting quota, and if you're not, how can you emulate or replicate some of the things they're doing? And I was always impressed with the reps as a sales rep when my peers were doing something innovative. I would copy it, right? That's good for the company, there's no law against, saying, "Hey, I'm doing that, so you can't do that." And so I think it's that thinking, "How do I do more with less?"

Gary Swart: I'll give you an example. This is pre-Saleforce.com, we were using an old CRM called Siebel, does anybody remember Siebel? (laughter) And it was the de facto standard, we spent millions of dollars on this thing at Rational, and that's not to mention the implementation costs. And one of the reps was a techy kind of a guy and he wrote a basic visual script that could pull a subset of the database, send that to him, and then he ran his own little marketing campaigns to the base.

Joseph Fung: Oh, wow.

Gary Swart: And I thought that was so genius because I was doing these things manually. He was so far ahead of his time.  He was a guy by the name of Paul Sivley, I'm still friends with Paul today and I said, "Paul, I need that! Everyone needs this!" And so, when I was a manager, I actually built a career on taking these best practices and deploying them out to hundreds of reps. That's process, right? That's the repeatable use casing, giving people the tools and as long as you have people with the right personal characteristic in the first place, they're competitive, they want to make money which sales reps are, they're typically coin-operated.  It's mouse and cheese, you give them a reward, they're going to do that thing over and over again.

Gary Swart: And so you have to make sure that you're hiring the right people in the first place. They're wired for speed, not comfort. And assuming you hire the right people in the first place and you set them up for success and you enable them, I think you win on both sides. You win top down because the company's happy with your sales leadership, and you win bottoms up because the reps are saying, "I like this sales leader because they help me make more money." It's not burdening people with the extra process or having them jump through extra hoops.  I've worked for companies where (laughter) there was more standing in the way of actually getting in front of customers, by the time you finished your forecasting, if you looked at the amount of administrative, it was more than 40 hours a week. So you had negative hours in front of customers. Too much process is not a good thing. Because then people say, "Why am I going through all of this? You're standing in the way of me getting in front of customers." And so I think it's about wired for speed, not comfort.

Joseph Fung: Well what's next for you? What are your big projects right now? And what are you working on next?

Gary Swart: At Polaris, as I mentioned earlier, we've been around for about 20 years, we manage four and a half million dollars and I really enjoy the work. I wrote a blog post recently, I said it can be frustrating because the job of the venture capitalist is like being a sweeper on the curling team (the Olympics had just ended). You don't throw the stone, all you can do is sweep the ice and hopefully keep it from slowing down a little bit longer and change directions slightly, but you don't get to touch the stone.  Maybe you can help guide where it should go, but you're just a sweeper and after years of operating, I'm comfortable in the passenger seat. I don't mind the job of sweeper as long as I have good stone-throwers. Good skips, I think they call them, right?

[bctt tweet="I think that there's a lot of aspirin products out there, but there's also a lot of vitamins. And we should take vitamins all the time, but we don't. But when you have a headache, nobody has to convince you to take an aspirin." username="kiiteHQ"]

Gary Swart:  And so I first and foremost invest in people. And second, big business ideas. So things that are disruptive, that are innovative, that have a large market and scale. And that are solving a headache today.  I think that there's a lot of aspirin products out there, but there's also a lot of vitamins. And we should take vitamins all the time, but we don't.  But when you have a headache, nobody has to convince you to take an aspirin. So I look for an aspirin, I look for a big migraine headache, and I look for a pain that a lot of people have and that somebody's solving it in a unique and differentiated way. And it's noisy out there in the world of sales so the product has to be at least five times better than anything else that exists. Solving one of the migraine headaches and reinvest strictly on the technology products.

Joseph Fung:  This has been remarkable. Thank you so much for the time today.

Gary Swart:  My pleasure to be here and I look forward to coming back. Thanks.

Joseph Fung:  Thanks.

Thank you for tuning into this episode of Sales Leaders Spotlight.

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