Martin Roth is the former CRO of Levelset, where he led the company from its first dollar in ARR to a $500 million acquisition by Procore in 2021. Currently, he’s the founder of MartinRoth.com, specializing in helping startups scale from $1M to $10M in ARR. Martin brings a wealth of experience in building and scaling sales teams, developing effective go-to-market strategies, and navigating the challenges of startup growth.
Discussed in this Episode:
- Martin’s journey from selling flip-flops to leading a $500M exit
- The challenges and lessons learned in scaling Levelset from $1M to $25M+ ARR
- Insights on building effective sales playbooks and team structures
- The importance of in-person customer interactions in today’s digital world
- Debunking myths about cold outreach and micromanagement in sales
Highlights:
(08:58) Building the first SaaS product and transitioning to recurring revenue.
(14:58) The evolution of Levelset’s sales motion and pricing strategy.
(29:06) The importance of sales playbooks and codifying the sales process.
(35:30) Optimal team structures for SMB sales organizations.
(52:25) Why in-person sales environments are crucial for early-career development.
(53:46) Debunking the myth that cold outreach is dead.
(57:57) The effectiveness of in-person field events and road shows.
(52:25) One thing revenue leaders believe to be true that Martin thinks is bull$***
(57:57) One thing that is working for Martin in go-to-market right now
Guest Speaker Links (Martin Roth):
LinkedIn: https://www.linkedin.com/in/martinrothsaas/
Host Speaker Links (Scott Barker):
LinkedIn: www.linkedin.com/in/ssbarker/
Newsletter: https://gtmnow.com/tag/newsletter/
Where to find GTMnow (GTMfund’s media brand):
Website: https://gtmnow.com/
LinkedIn: https://www.linkedin.com/company/gtmnow/
Twitter/X: https://x.com/SalesHacker
YouTube: https://www.youtube.com/@GTM_now
The GTM Podcast (on all major directories): https://gtmnow.com/tag/podcast/
Resource we Recommend:
- HG Insights. Feeling that AI FOMO? You’re not alone. That’s why HG Insights created The Next Generation of Sales AI report — to calm the FOMO and help you bring AI to your GTM teams. It includes a breakdown of the Sales AI landscape, adoption of GenAI and Sales software across buyer groups. Plus, an analysis of the top 75 trending sales AI tools. Why HG Insights? Simple. They’ve been writing market reports for years as the pioneer of tech adoption and market insights. Trusted by GTM leaders at the likes of Snowflake Five9 and Google Cloud to improve GTM efficiency. Thinking about AI for your sales team but unsure where to start?
The GTM Podcast
The GTM Podcast is a weekly podcast hosted by Scott Barker, GTMfund Partner, featuring interviews with the top 1% GTM executives, VCs, and founders. Conversations reveal the unshared details behind how they have grown companies, and the go-to-market strategies responsible for shaping that growth.
Episode Transcript
Scott Barker:
[0:00] Welcome to the GTM Podcast. I always appreciate you lending us your drums for the next 45 minutes. My goal is always to leave you with some actionable tips, tactics, strategies that will help you scale your business or the business that you’re currently in the growth stage of. And I’ve got a great guest, someone I’ve been hoping to have on the pod for quite a while now. I am joined by Martin Roth. Martin, welcome, man.
Martin Roth:
[0:26] Thank you for having me.
Scott Barker:
[0:27] Martin is the former longtime CRO at Levelset, from its very first dollar in ARR to later being acquired by Procore for half a billion dollars in 2021. Currently, he’s the founder of martinroth.com, which specializes in helping startups go from $1 to $10 million in ARR. He’s an investor. He’s an advisor. We’re extremely fortunate to have him as an LP in GTM fund. And a fun fact I just learned as I was doing some research before this, you were also employee number one at a flip-flop company back in 2009 before getting into tech. I love it. I feel like from selling flip-flops to half a billion dollar acquisition by Procore feels like a pretty damn good title for this episode.
Martin Roth:
[1:15] Or at least a podcast episode.
Scott Barker:
[1:17] Yeah, exactly. But man, let’s get right into it. So, you know, you did the thing. The thing that just about every early stage operator, many of which are listeners to this podcast, aspires to do, take a startup from literally zero to an incredibly successful exit. And along the way, having a 10-year run, which is pretty unheard of in our world, and getting to wear many hats from director of sales to VP to CRO, um certainly rarefied air uh my friend what’s the secret how did how did you do.
Martin Roth:
[1:56] It um i didn’t quit i guess that’s like the the i don’t mean to speak in platitudes but man it’s um you know building the company’s hard zero to one’s really hard one to ten’s really hard ten to twenty they’re all different versions of hard um and there’s so many times that you’re just like, do i want to do i have it in me and then you then you look at yourself in the mirror and you say self you can do this and then you get back out there um but no it’s there’s no secret we i was really lucky you know i came into a situation so the how i arrived at level set so before it was level side it was called z lean um the company it was a place for contractors to file construction leans online. That was the business. No venture funding. I think there was some like.
Martin Roth:
[2:50] Friends and family, very small investment. This is 2012 when I met Scott Wolf, the founder. And he had been running the business on the side. He was an attorney and had this as a side business. And it was just like a… Think of it like an e-commerce business, but with digital products. So you could go online, like LegalZoom, you could file this document, they would take care of it. It’s all transactional revenue. And so I was really fortunate that I had, number one, a world-class founder, Scott Wolf, who took a chance on me for no obvious reason. I was 23 years old. I was a failed entrepreneur. I would say I was a founder of a company. We had raised some money. We ran that for two and a half years. It was a consumer product, group gifting, or I guess what Venmo is now. I did not invent Venmo. I want to be clear. But we invented something very similar that had wallets so you could do group gifting and we just never got it off the ground with enough revenue to continue raising money which is the name of the game in b2c um and then i was doing odd jobs i was like petty cabin in the french quarter in new orleans like you know for cash and then promptly going out like every night and spending all the money and then doing you know that’s a that’s not a good place to to be um.
Martin Roth:
[4:07] Sold insurance, like health insurance for about 10 minutes, or really like two months, I was doing that job. And I tried to sell Scott Wolf health insurance for the company, thinking that it was much bigger than what it was. I mean, at that point, they had three employees or four employees. And he’s like, well, I need somebody to come run sales. They just built the first SaaS product. And so they were trying to go get recurring revenue. But they had a pretty decent amount of transaction revenue. And it was probably doing, I don’t know, $20,000 or $25,000 a month in transactional. And so yeah, so I joined.
Martin Roth:
[4:44] And for the first two, three years, I mean, I carried a bag and had to go figure out how to do enterprise sales and made a bunch of mistakes along the way. We had success pretty quickly. We got to a million within the first, I don’t know, 15 months, 18 months. I don’t remember exactly what the time stamp was. But it was all by going after enterprise, like $100,000, $300,000, $500,000 deals. And as you know, or as many people who listen to this know, if you’re a seven-person company, that’s how I was employee number seven. If you’re a 10-person company and you go get a billion-dollar enterprise customer to pay $200,000 a year, they’re expecting a lot out of those 10 people.
Martin Roth:
[5:27] And so we very quickly got ourselves into a situation where we had to really figure out how to serve those customers. And all the while, we just were really good at content. We were driving traffic to the website by creating educational content. We owned the long tail of search terms around construction lien rights and payments. And that’s what I mean when I say I got really lucky that there was a marketing… Machine. That really was our founder who was just prolific at producing content. And that made it a lot easier for me to build the SMB sales motion that we ended up being the core sales motion that we built at Levelset. I mean, as we scaled, there was always a mid-market and enterprise component. I always ran the enterprise pipeline off the side of my desk as we were building the team. But yeah, we served all of the segments eventually. But the core business was this S&B, high velocity, $5,000 average deal size, four-day median sales cycle.
Martin Roth:
[6:28] Transactional sale to small businesses, to contractors and roofers and plumbers and electricians and fill in the blank. That was the world we lived in. So what’s the secret? I don’t know. I just have an appetite for learning. I like to win. I’m competitive. I probably am naturally inclined or have a predisposition toward sales. I don’t know what my desk profile says about me, but I’m sure it probably directly overlaps with sales leader or account executive. And so it’s like I found my home. I tried… I was always a hustler. I hustled flip-flops at Feel Goods, which if you go to Whole Foods, you can still… Flip-flops, they have them in whole foods now that was the first so i was 19 we drove literally like all over the eastern united states from whole foods to whole foods checking the end caps and like making sure that the flip-flops look good and talking to the buyers and that was probably like my first experience with sales but nothing nothing really prepares you if you’ve never done software sales nothing prepares you for going into like b2b sas sales so you you have to like really lean into the learnings. I remember there was this podcast. I don’t even know if it exists anymore. Bowery Capital. It’s in New York. The Bowery Capital Startup Sales Podcast. If anyone listening to this is at Bowery Capital or knows them, I think the guy’s name is Mike.
Martin Roth:
[7:54] Please have him reach out to me. I owe this guy a Christmas ham or something. Because it was 2014, 2015, and he’s having Mark Roberge in the early days of HubSpot before they went public. And really bona fide sales leaders on there before Sasser was early. There was Sasser, the startup sales podcast, and a handful of other resources. Mark Suster, his blog was out there. There was a handful. The people who’ve been selling as long as I have know these blogs and podcasts. Because that was the education that we had. You didn’t have all the content that you have now. So anyway, that’s the secret. There is no secret. Just work. The other thing is, I live in New Orleans. Levelset was the only venture-backed company in New Orleans. Where else was I going to go? I’m going to move. Like, you know, so we made it work. And we, and I was surrounded by incredible, incredible talent. Like our, that OG team of, of seven people, like the, the original call it like a founding team. I’m not a founder. I’m not going to claim to be the founder of Levelset, but that founding team, CTO, VP of customer experience, chief legal, our CFO, who kind of came later, but like that group, everyone stayed with the organization in executive roles the whole time. So you have this managerial.
Martin Roth:
[9:19] Like durability i don’t know what the term is for that but there’s like dynamic range of each of these individuals when you would get together skills complementing each other um and everybody pushed each other to to grow and be better and like when you’re in that environment and you have a product and a customer that you care about that feels good to sell to these people because we help them get paid faster on their construction projects um that’s a good that’s a good place to operate from um we just we it was it’s the most important thing i’ve ever done in my life so far is building level set alongside a bunch of of awesome people.
Scott Barker:
[9:56] Hell yeah i love that and you know there’s a lot of i can think of a lot of similarities in my own journey of kind of like fumbling around different versions of sales and startups before finding tech and then you know having this huge gap in learning and looking for all these different places to try and fill that gap. I don’t even know if I knew about podcasts like super early on in my career. I think it was like still books like Mark Roberge’s Sales Acceleration Formula and Trish Bertuzzi’s Sales Development Playbook. Like just, you actually had to consume these books from like not that many sources that were talking about, you know, software sales and how to scale companies.
Martin Roth:
[10:35] Predictable Revenue, that’s number one.
Scott Barker:
[10:37] That one lasted about 12 years, I think.
Martin Roth:
[10:40] The Rebrand, Sales Acceleration Formula. These are like, look.
Scott Barker:
[10:44] This is the.
Martin Roth:
[10:44] This is these are like um it’s a rite of passage you have to go through through all the books because it’s it’s the right it’s the stuff like that’s what they say if you just do what they say then it works like.
Scott Barker:
[10:58] It’s genuinely what i did and like tbd of like all of them will still work in today’s world but certainly when they came out like all you had to do was convince your leadership to do this thing that you read in this book and it would it would genuinely work so um I agree. Well, if anyone from Bowery Capital listens to this podcast.
Martin Roth:
[11:17] Hit up my man.
Scott Barker:
[11:18] Martin. He’s got dinner waiting for you.
Martin Roth:
[11:21] But the other thing, it’s funny, you say you can convince leadership. That was the, I guess, unique position that I was in. And we were young. I was young. I guess I still am young. I was 23 years old. I came in, you’re closing deals, and it’s like, okay, well, this is working. I need more bandwidth. Let’s go hire somebody. Okay, now you got to go figure out how to hire and who to hire. and like boy is that, a lifelong pursuit of learning how to hire well, I still haven’t figured it out. I mean, I think I’m better than most. I have more practice at the very least. But learning how to hire, learning how to performance manage, building sales playbooks, it was 10 years of just full of lessons in learning how to be a salesperson, learning how to be a sales leader, learning how to be a leader of leaders, learning how to be an executive, learning how to raise capital, learning how to manage a board, all of those things.
Martin Roth:
[12:19] If you have an appetite for learning, that’s why I love the chief revenue officer role or revenue leadership, executive revenue leadership, whatever the title is, it’s such a wonderful role because you get to touch every part of the business if you choose to. And I think the best revenue leaders know that they can influence. Even if they don’t control it, they can influence product. They can influence finance. They can influence customer success if that’s not part of the revenue or they can influence marketing. But you have to be curious and you have to go pursue it. So I just never… I didn’t quit mostly because I was surrounded by amazing people that I was committed to.
Martin Roth:
[12:57] I definitely am loyal to a fault. So I wanted to go finish the job that we set out to do. I mean, by God, we had put so much time and energy into it. I wasn’t going to leave like in the the top of the ninth inning without seeing the the game end like i had to finish finish the deal um but i was also i was challenged the whole time like i was interested in what we were doing and we’re working in a high a fast growing company um, venture-backed company every six months it’s like a new business there’s more people you know we grew we grew quickly again and that forces you to grow if and if you’re not growing then you’re just going to get left behind so i think that you know i’m an ambitious and like competitive person and i think it was the right petri dish of of ingredients um you know and then a little bit of luck goes a long way like you know we we built we did a lot of things well but we also got, incredibly lucky along the way. And maybe we put ourselves in the position to get lucky, whatever. But, you know, fortune and fate, and there’s all of that stuff involved too.
Scott Barker:
[14:04] Yeah, for sure. Can’t remember who said it recently on the podcast, but basically along the lines of, if any successful person tells you that there was no luck involved, they’re full of shit.
Martin Roth:
[14:15] There’s always some.
Scott Barker:
[14:16] Luck involved and usually it follows hard work um but um so just quickly like setting the table so what was the rough arr range when you got acquired.
Martin Roth:
[14:27] So we i tell this story in this way it took us like a year year and a half to get to a million yeah it took like, five and a half or six years to get from one to ten wow and there’s a bunch of mistakes along the way um 10 to 20 took like 18 months wow and then we like we got it up to i don’t know 25 ish it’s all like it’s public like pro core um and if you look at the earnings calls it’s all there i think we were at total we had revenue in different bands we had arr we had transactional revenue we also had finance like we were financing um, we had a financing product, we had a payments product. So like all in revenue was approaching 30-ish.
Martin Roth:
[15:15] And I’ll be honest, I don’t remember exactly what the ARR was. I stayed on for about a year and a half after the acquisition. I left about a year and a half ago. So it’s all like fuzzy numbers in my brain. But yeah, so my scale of like getting it to a particular number, we were when i um like at our peak velocity we were booking you know a million and a half to two million dollars a month in gross new bookings and um team size was total company size was probably between 350 and 400 um but a lot of that wasn’t like we were investing a lot in product that was like not directly tied to revenue so the the revenue per head number was probably misleading, um and then the revenue side i don’t know the on the sales team there’s probably, 75 80 people um across like rev ops enablement that’s probably another 15 ish and then the cs side uh including operations was another probably 80 to 90 so that org um it’s pretty sizable Yeah.
Scott Barker:
[16:24] And did you have sales, marketing, CS, ops enablement, BD, partnerships, was everything under your purview or did you have a counterpart?
Martin Roth:
[16:34] As we scaled, we started to specialize. So it was initially sales, marketing, customer success was one work. And then over time, like our… Gretchen, who ran our CS team, she took customer success and operations and pulled that together. And then that became its own org. I’m a sales guy. I wish that I was better at marketing. I spend more time learning about marketing and copywriting and all of the persuasion and just funnels and all that stuff. I love it, but it’s not my natural skill set. And so it was pretty obvious. Once the marketing team got to a handful of people, it was like, we need to go have a real executive marketing leader. So at scale, revenue was new logo sales, install base sales. So sales team owned, expansion, upsell, renewals, all of that was on the revenue side. Um as you know smb mid-market enterprise sdr team and then all of the ops and enablement rolled up to to me um i didn’t have bi that was on our vp of finances our our cfo’s team but yeah so for me it was new logo sales install based sales operations enablement and um and sdr i.
Scott Barker:
[18:03] Love But it’s also so critical for leaders to have that, you know, self-awareness of like where your blind spots are, where you’re maybe not as naturally talented. And I feel like there is a, there can be leaders that hold on to things just for the sake of holding on to them and not going out and looking for a counterpart, another leader that can fill those gaps instead of, you know, pretending like you are the best at something just to maintain control.
Martin Roth:
[18:33] For sure. And another thing is like along the way is I’m sure people who listen to this podcast can relate along the way. If you have P&L responsibility, part of the job is when you go find talent that’s available, you find a way to get it on the team. And so I was always like, okay, if I have to give up two sales heads for right now so that I can go get this awesome growth marketer, okay, I’ll give up some P&L. I’ll hire the person. Maybe I’ll manage them for a bit. And then if we have a senior marketing leader or an executive marketing leader come in, they can have them. So that’s why it’s like the lines aren’t totally clear because as the team grows, we just all had our hands in the work and working on it. And I didn’t have a big ego about like, it has to be mine or I need credit for it. I was just like, look, if there’s good, smart people that can come and help that know how to do the job, get them on, I’ll give up some of my budget or it doesn’t matter to me. Just like build a team and let’s go. So there’s, you know, there’s everybody at an executive level has their fingerprints all over the org if you’re doing it right, I think.
Scott Barker:
[19:42] Totally. And that’s so critical. You described earlier how like tight the original seven, you know, kind of founding team members were. And that probably just sort of bled through the entire organization as you scaled.
Martin Roth:
[19:56] It’s at the culture. Like we were, you know, say culture is like Brian Halligan had that post on, I can’t remember. It went all over Twitter and everybody was talking about it. But one of the, it’s like learnings from zero to $25 billion. I can’t remember what the blog post was, but he said that culture is your second product. And I think that’s true. And each of the founding team members, certainly the founder is like the number one influence on culture. But each of those early hires has so much leverage on the culture in a positive way or a negative way. And we just, like I said, we got really lucky that we had this group or this cocktail of individuals that came together that all offered something unique and different from each other to the culture. I’d say like if we obviously had a great product, we served hundreds of thousands of customers on the transactional side, on the AR side, we had 5,000 customers at scale. We were really making an impact on the industry, but the other…
Martin Roth:
[21:12] Thing that we did that made a last sea impact on a lot of people was the culture that we built, which everybody says, or maybe not everybody. I assume everybody says that their culture is great. We really did, man. It was an incredible…
Scott Barker:
[21:26] Maybe when they’re there, but when they’re on this podcast looking back, not everyone says the culture is great.
Martin Roth:
[21:31] I mean, I still like… That’s the thing that you miss is it’s always the people that you miss after acquisition, or at least I’ve learned through therapy and talking with a bunch of other post-exit founders. But when I look back on what we did well, or what I would want to carry with me to the next, if I have a backpack that gets me from last chapter to the next chapter, or what do I want to put in the bag? So many of the core values that we had are just the rhythms and how we made the culture come alive and attach the work everybody did to the mission and the vision. We did that in an exceptional way. And I think it’s hard to do because it’s easier to… It’s so easy to prioritize other things over that. There’s always a customer or something to do with the product, or you got to hit a revenue number and culture can become secondary unless you prioritize it. That was, yeah, that’s definitely, it made the experience a lot better as an employee or as a part of the team. But it also was like this learning experience for everybody. And that was a really rewarding part of the journey.
Scott Barker:
[22:38] Yeah. Certainly the stuff that sticks with you is the late nights with your team or the early mornings or those times when the creative juices are flowing and you’re all together and things are just kind of clicking. But I want to sort of, because it feels like there’s almost like three podcasts in this one. You can probably do a zero to one, a one to 10, and then this 10 to 20. But it sounds like the one to 10 was the hardest part of the the journey and it makes sense why you’re now focused on that because i imagine you believe that is consistently you know the hardest part of the the journey and as someone who’s been been through it and been through it successfully so let’s maybe zoom in there and i think we started talking about culture so let’s, stay down that thread because i imagine that was also when you hired the most people was it from like one to 10 uh imagine that’s when you went on a pretty big spurt probably.
Martin Roth:
[23:38] Yeah i mean the what’s, let me think about that i don’t know i used to have i’m sure there’s a spreadsheet i have somewhere that has like what their attrition rates are a number of people hired probably from from one to ten although look in revenue at least for for our model which we did not have product-led growth. We did not have any viral components. We had an inbound motion and an outbound motion, and an SDR motion, which was primarily outbound. And.
Martin Roth:
[24:14] Whenever you have that kind of sales motion, you know how you grow revenue? You add people. There’s a natural limit to the capacity that a sales rep can carry, how much quota they can carry in a year or in a month. And so when I said we went from 10 to 20 in 18 months, that was probably the most rapid expansion. But the reason I paused is because before that, um covet happened before we hit 10 covet happened which was a weird time for everyone in the world obviously but certainly in venture software yeah in construction yeah yeah yeah you know what’s funny is that construction was like construction was ripping like at first it was weird but then for all of 2020 and most of 2021 it was like a really good market to be selling into construction And we didn’t know that on Friday, March 13th was like the last day of the previous world when everybody was, I remember we were in a planning session, like a quarterly planning. And we would do it middle of the last month of the quarter and ahead of the next quarter. And I remember sitting there being like, so do we think that like anything’s going to happen with this COVID stuff? We’re going to have to close down. And that was the last time that group saw each other in person for like two years. Right.
Scott Barker:
[25:32] I see.
Martin Roth:
[25:32] Yeah. And the kicker, Scott, is that on Monday, March 16th, 2020, I started a class of 14 new sales reps. Shit. Yeah.
Scott Barker:
[25:42] Shit.
Martin Roth:
[25:43] So we were at…
Scott Barker:
[25:44] Were they supposed to be in person? Or was it always planned to be?
Martin Roth:
[25:47] Yeah, we had everybody planning to fly to New Orleans because that’s what we were doing. So let me back up real quick. So we… We raised our Series C. It was a $30 million round. That was at the end of 2019.
Martin Roth:
[26:02] And the reason we raised it is because we had kind of figured it out.
Martin Roth:
[26:06] We were at, I don’t know, whatever, eight and a half or thereabouts. And the sales motion was working. We had figured out how to turn our own product data into leads and had a successful outbound motion. The traffic was growing we could source inbound leads um pretty consistently and we knew the conversion rates we had our handle around the economics we had real enterprise pipeline we had just closed a few like marquee you know half million dollar plus deals that were valuable from a revenue standpoint but also valuable strategically and so like the end of 19 there was a ton of momentum and we said okay great let’s let’s go really scale the sales motion because we can see how this goes uh this this scales the revenue number and you know it was inputs and outputs if we can onboard them and there’s a certain um success rate in an onboarding class well then here’s how the revenue will scale so we were adding 14 new reps every other month um right and and we would run them through a two-month boot camp i guess we called it levels at sales academy and it was it was awesome like it really i wish we didn’t have to tear the whole thing down because of covid but basically had we kept it up we could have just every other month kept running them through well and we were an in-person team we had the austin office we had the new orleans office we did not hire remote at all um and then covid happened we riffed at the it was april 1st 2020 um.
Martin Roth:
[27:33] That was the date. I don’t know why we picked April Fool’s Day, but that was the date. It was terrible. A lot of people went through it.
Martin Roth:
[27:41] The other revenue leaders went through it. And then we pulled the handbrake real, real hard on sales team size because we didn’t know what the economy was going to look like. And so I think retrenching and getting a little more deliberate about the pace of how we’re scaling ended up being a great thing. We grew 95% in 2020, but we didn’t hire as aggressively until the latter part of the year. And as you know, it takes ramp time and the whole thing. So there was like beginning of 2021, got off to a slow start. And then by mid 2021, we were ripping. And that was when the revenue really just went like, you know, and the other thing that we did, which I think gets back to your question around some lessons learned between one and 10, we didn’t, we didn’t have an upsell or expansion motion at all. Well, I say that. That’s not fair to the customer success team. We had a wonderful customer success team. That was awesome. But we had hired that team to be trusted advisors and to be the advocate for the customer and to make sure that customers were successful. They also had the responsibility to upsell and expand and go ask for money, which is not really what we hired them to do. And so I remember- Like a different archetype. Yeah, totally. And also, by the way, ask for referrals and ask them to be a reference and ask for testimonials and five star reviews and ask them to be a part of a case study and ask them to give product feedback on and on and on and on.
Scott Barker:
[29:08] You can only have so many asks, you know, as a single human.
Martin Roth:
[29:11] It’s like, it’s one of the hardest jobs in the organization because you’re on the front lines. You have to be the strategic advisor. You also have to be a firefighter at times. And it’s, it’s like unapologous. What is it? Not, what is it? Thankless? That’s the word? It’s a thankless job sometimes because you really carry a lot of water. And so Gretchen Lynn, the VP of Customer Success, she was employee number one at Levelset. She was the backbone of the culture and all this stuff. But anyway, we worked very closely together and we sat down, we’re looking at the upsell number. And I’m looking at our install base. And at that point, we had, I don’t know, 8 million, 8.5 million, maybe more. And we were getting like $30,000 a month in upsell. I’m like, this doesn’t make sense. There has to be more compared to $700,000 a month in new logo bookings. I’m like, something is off. So we listened to the calls. We had tons of conversation around, okay, what if we take this upsell and expansion motion and bring it over to the sales side, hire salespeople to do it, comp them like salespeople, 50% variable, 50% base salary, give them quotas, build a playbook around it, and let them go sell into the install base while continuing to invest in the customer success motion to be the trusted advisor to make sure that there’s high engagement, run the QBRs, etc. And we made that switch in the middle of 2020.
Martin Roth:
[30:37] It took a while to get it right because teams were stepping on each other’s toes And I, you know, the salesperson’s calling and the CS person’s calling and the onboarding person’s calling all within like two hours of each other on the same day. Like we had to get the rules of engagement figured out. But within six months, we’d gotten that upsell motion from 30,000 a month to like half a million a month.
Scott Barker:
[31:03] Wow. So a question on that, because I saw this as soon as, not as soon, but three to four months after we did this at Outreach, lights out, changed the trajectory of the business. I’ve heard a lot of folks come on this podcast and say, when they made that shift of having, call them account managers, true sellers, complex salespeople, to go and be a counterpart to CS, like, almost every time I’ve heard it, it seems to work. When is too early? It seems like you should introduce that pretty damn quickly if it is working so well for people. Is there too early?
Martin Roth:
[31:41] Yeah. You need to have enough of an install base that you can actually carry somebody’s quota. So let’s just use simple math. If you want a salesperson to make $100,000 a year, to use a round number, you want the economics roughly to be, let’s say, 4X. 5X would be better, but 4X. So if they’re going to make a hundred grand, they’ve got to carry at least $400,000 in quota. If you’re going to comp them 10%, then the hundred, what’s a hundred thousand dollars. How does that work? Yeah. Cause 50,000 is 10% of 500,000. So like, whatever, do your math. I’m not good at public math, but my point is they have to be able to close at least four to $500,000 in expansion. Well, okay. how much of an install base do you need to close half a million dollars in expansion revenue you probably need like at least two million two and a half maybe three million and so i think as you’re getting to like between three and five million it’s probably the time to put a single person who is exclusively responsible for running that motion and i you know.
Martin Roth:
[32:48] You got to figure it out. If you have five customers that make up that 3 million, then you’re going to have a different motion than if you have an SMB motion like what we had. And we just had a lot of opportunity to take people from legacy prices to what would be a very fair and modern price. Because somebody, usually me, way early on, six years ago, five years ago in the life cycle of that customer, sold them for $1,700 for some all-you-can-eat buffet price that was like, we just need customers and we don’t know our pricing and whatever. So it’s easy to talk about this stuff academically. It’s just you have to look at the business and what the customer mix is and how far along they are in their packaging. And the product too.
Martin Roth:
[33:38] By the time we made that switch, we had a big enough product where there were opportunities for cross-sell, there was, the packaging was established well enough where we really understood our value metric. We could be confident and have leverage with customers who maybe consumed a certain portion of their credits or what have you. I don’t mean to get too tactical, but the question of is there a time that is too early? Yeah, if you don’t have enough customers to support one salesperson to make $100,000 a year, well then go get more customers and then, you know, the founder does the upsell motion.
Scott Barker:
[34:16] Yeah. I like that call out on product. Yeah, I think it’s a factor of total ARR, but then also can you… Does your product allow you to go into other business units that you have that you can cross sell upsell into? Cause you know, it’s not always going to be the case where the business unit you’ve sold into is naturally going to continue to grow. You might need to go into other parts of your customer’s organization to actually upsell.
Martin Roth:
[34:44] Yeah. And look, you see a lot of companies right now that are kind of nervous or, or shaking in their boots a little bit because they have user-based pricing or seat-based pricing. And you, A lot of the conversation right now with AI is if headcounts aren’t growing, then how do you grow enterprise value if you are tied to seed count? And you see a lot of companies switching to usage-based pricing and having some sort of credit system. Or maybe they do two or three tiers. So they’ll have a base price and they’ll have a tariff on credits. And then they’ll also charge for seeds or feature sets. There’s a million ways. I’m not a product packaging expert. There’s a lot of folks that are good at that. But what I know and what we anchored on really early that was the right decision was, for us, the number of construction projects was a really easy proxy for the size of the business and the value that we delivered. And so we anchored the construction project volume and it solved for a lot of problems that we had in the business prior to that. But look, we were also three or four million dollars in, right? Like at three or four million in ARR before we figured any of that stuff out. And we still didn’t, like packaging.
Scott Barker:
[36:02] So were you seat-based before? And then at three to four, you switched to project?
Martin Roth:
[36:07] Brother, we were every kind of base. We were seat-based, we were flat price.
Scott Barker:
[36:11] We did, I mean- How much will you pay me and how do I structure this?
Martin Roth:
[36:13] Yeah, it’s like, do you, can you pay money in like American dollars? Great. I don’t care if you sit in on a carrier pigeon. Paces is fine too.
Scott Barker:
[36:21] Honestly.
Martin Roth:
[36:22] That’s right, I don’t care. Yeah, that’s, you know, it’s funny, like later on, you get a little more discipline around this kind of stuff. And you’re like, you have terms and you only do deals in certain ways. But I definitely have the like scrappy zero to one mentality. I’m like, I don’t, can they send cash in a duffel bag on a truck? Like, it doesn’t matter.
Scott Barker:
[36:41] I’ll go pick it up. yeah whatever i’m.
Martin Roth:
[36:45] Gonna say i just gotta get the deal go go close the deal.
Scott Barker:
[36:48] I love it i love it um all right before we move on to a founder question i really like this one that was sent in i think you have a good uh kind of structure for it but um before we go there looking back again from the zero to uh sorry one to ten um if i could fly you back in a time machine and you could fix one mistake that you made during that time period, what would it be?
Martin Roth:
[37:23] Can I pick more than one?
Scott Barker:
[37:25] Yeah, you can. One is tough.
Martin Roth:
[37:29] So I’m embarrassed to say this out loud because now I’m like, follow the playbook, Mr. Procedure, all this stuff. That is a learned trait. That’s not natural to me. I had to contort my own personality or my own habits to adopt more rigor in how I coached and how I led and how I acted as a salesperson. We didn’t have a real sales playbook until 2018. That was five years in. And so we were closing deals almost in spite of ourselves.
Martin Roth:
[38:07] Now, I was or we were attentive and we coached. I don’t think we ever really sat down and understood, here’s how you get a prospect from totally cold or an inbound lead all the way through with objective markers and stages. And we had a CRM, we had sales stages. It’s not like I didn’t try. We didn’t really understand a sales playbook until I wish I had…
Martin Roth:
[38:37] If I could do it again, knowing what I know now, I know we could go faster. If for no other reason, then we would just have more discipline around how we ran deals and what the process was for how to get confirming champions and setting clear next steps and running pipeline meetings and all of the blocking and tackling of running a sales organization, we did it wrong for a long time. And that was a bit of a coming of age tale for me as a leader. And I’m just thankful that I didn’t get fired along the way because I probably should have been. But that’s probably the number one thing I’d do differently. There’s a lot of hiring mistakes that I’ve made. There’s a lot of firing mistakes that I’ve made. There’s so many conversations that I wish I could have back with people that I made mistakes or I didn’t give them the full, the right experience for how we parted ways. There’s a lot of those that still keep me up at night where I’m just like, man, I wish I had that back. They didn’t deserve that kind of thing. That was on me. And that’s a little bit of my naivety or lack of experience as a leader.
Martin Roth:
[39:41] But I’d say the thing that probably hindered our growth was really around the sales playbook. And also learning that I…
Martin Roth:
[39:54] This may be specific to me. The way that I sell, if I have to carry a bag in the way that I sell, I don’t know how to teach anybody to sell the way that I sell. Because I’m, I don’t know, not that I’m like God’s greatest gift to sales or whatever. I’m just, I kind of just go and do the thing and I close deals, right? And I don’t know how to make the connection between A and B. And so that’s why it took me so long to codify it into a playbook and then get some religion around it is, I had to get outside of myself and actually articulate, okay, what is the process by which a salesperson guides a buyer from being problem aware all the way to making a purchase decision?
Martin Roth:
[40:40] And part of that, I think I was fearful or afraid to get into the weeds. And so for a long time as a leader, I didn’t do the most fundamental thing that’s required as a revenue leader, which is deal by deal, going through pipeline, painstakingly going through pipeline, looking at every deal, making sure that it’s compliant with the playbook. And like I said, that wasn’t until like 2018, 2019. And that was when I really came into my own as a revenue leader. I think if I’m like, you know, give myself a grade or so that was the pivotal moment that year where I got serious, I got more intentional, I got into the weeds, I worked every single deal. I worked behind the rep on every single deal to support them and to guide them. And that’s a mistake. I was waiting too long to build that skill or waiting too long to learn that that’s what’s required. Because I’ve met people through GTM Fund or other folks that are executive revenue leaders at very big companies, bigger than what I ever built, and they still get granular and get into the pipeline. And you sit into their pipeline meetings or their forecast meetings, and they can go down to who the contact is on a key deal and know the next steps. And when you see somebody who runs a billion-dollar ARR organization getting to that level of detail in the forecast meeting, well, then what’s your excuse at $5 million or $2 million or $10 million?
Martin Roth:
[42:08] And I don’t know, maybe I was just like, my ego got in the way, or I just didn’t, I was ignorant, like, or too naive, I didn’t know.
Scott Barker:
[42:16] Yeah.
Martin Roth:
[42:17] I don’t know if that answers the question, but that’s what I’d go back and do differently. Because that’s what I do now. Like, as I coach companies and help them, I’m like, look, it’s all in, it’s in the tape. Like, go look at the pipeline. Go look at the deals.
Scott Barker:
[42:31] Totally. So, yeah, I think one of the things is when… Skills and this process sort of naturally, intuitively come to you, which it sounds like in sales that kind of was natural for you. You kind of make this assumption, and I’ve fallen prey to this in the past too, is that everyone sort of thinks like you and that it would intuitively come to them as well. So why do I have to go in the weeds when like, we all know that this would be a natural next step. And then you come to learn over time, like, oh no, like many folks need that. Okay, here’s step one, step two, step three, step four, step 4.5, step 4.75. So I think that’s a fantastic learning. And now you went against your nature and now you spend all of your time teaching folks how to do the same, which I think is cool. All right, found a question. This is a great one. And I don’t think we talk enough about team structure and I know it’s pretty nuanced, but the question is we’re at 5 million in ARR and it’s starting to feel like we’re understaffed across sales, marketing, and business development. Is there an optimal team structure at this stage for each department? They do give a little more context saying, we sell into SMBs and our sales cycles aren’t overly complex.
Martin Roth:
[43:51] So the question, just so I can repeat it back, the question is, what’s the optimal team structure for our stage and scale?
Scott Barker:
[43:59] Correct.
Martin Roth:
[44:00] Well, I don’t know. But let me guess.
Scott Barker:
[44:03] That’s always the right answer when these questions come in.
Martin Roth:
[44:04] Yeah, I don’t know. Here’s how I think about it.
Martin Roth:
[44:10] For transactional sales teams, for SMB sales teams… It’s kind of a math problem. Like the team structure is going to be dependent on what your growth goals are. So what I’d do is if we were sitting, and by the way, whoever that founder is, reach out to me. Like I’m very responsive and I’ll walk you through it. What are the mistakes that so many early stage sales leaders make in the annual planning season, which is like what we’re in right now, or don’t do what we did, which is do your annual planning between Christmas and New Year’s. You have like one week to get all of you. Yeah, don’t, hopefully you start earlier than that. But when you look at your annual plan, you’re going to put a headcount plan together. There’s two ways to look at it. You can go top down, which you absolutely have to. You have to look at what’s the demand model look like. If you have an inbound motion or an outbound motion or a combined motion, or if you’re using events like conferences or field events, however you’re driving demand, have a forecast for what kind of demand you think is going to happen over the next. And at 5 million in ARR, you should have a pretty good sense for where your demand’s coming from. So just like drag it out, look over the next year, and then based on your historical conversion rate, or maybe you’re like rolling 90-day conversion rate, what does that look like from a bookings perspective? And then bottoms up, do your capacity model. How many reps do you have? What’s the average quota capacity? What is that total up to? Do not get into a situation where you have less quota capacity than what your revenue target is.
Martin Roth:
[45:40] Every single revenue leader listening to this podcast knows what it feels like when you don’t have enough coverage and you’ve got to get everybody to just redline the entire quarter to go make up the number by the way you also have to go higher to go backfill those seats and you have a ramp period so the advice there is we’d look at your annual plan do a top-down model and do a bottoms-up model and they should overlap maybe you’ll have a gap but you can kind of tweak the numbers a couple of notes don’t forget to model in attrition and model in ramp time right It takes people time to get up to speed and you’re going to lose some folks over the course of the year.
Martin Roth:
[46:14] Especially in an SMB team takes, I don’t know, 18 to 24 months is probably your average tenure for an SMB sales rep. They just burn out. Like when you have a one week to two week sales cycle, you can only do that motion for so long before your, your nerve endings just get frayed and you’ve got to move onto like a more sophisticated sale, frankly. Um yeah and so what’s the optimal team structure it’s all going to be based on what your revenue target is and then you do let’s say your your per rep per month quota is 50 000 in arr okay great well if you want to go close another five million dollars next year what is that a month it’s like 450 000 a month so 450 divided by 50 000 is nine you need nine reps you probably need 10 because you need some buffer that’s two teams you need a sales manager for each team of five.
Martin Roth:
[47:10] Um i’m definitely speed running through this and throwing out a bunch of like uh i have some rules of thumb around structures but that’s that’s what i’d look at as it relates to marketing um.
Martin Roth:
[47:23] I can’t help you there. I mean, I can make some suggestions, but I’m less experienced on building the marketing teams. Once you get past like seven, eight million in ARR. And then BD, when you say BD, I assume what you mean is SDR.
Scott Barker:
[47:42] Correct, yeah.
Martin Roth:
[47:43] We didn’t have SDRs for our SMB motion. All of our reps were full desk. They sourced their own pipeline and they closed their own deals and ran their own demos. is. And so the summary, the TLDR is, it’s all going to be dependent on what your growth goals are back into the number by using a top-down demand-based model and a bottoms-up capacity-based model. Measure those against each other. And that should give you your sales rep headcount plan. And then for BD, if your demand model is based on the number of SDR heads and the average performance per SDR, well, that’s what’s going to tell you what your team structure should look like um and if you the last thing i’ll say on this is do your reps a favor and try not to have smb teams that are larger than 10 people um 10 to 1 like manager to rep i like 6 to 7 to 1 um if your pnl can afford it and if you have that enough profitability um just because once you get over 10 reps, you’re kind of doing a disservice to the individual salesperson because they don’t get the coaching and development that they need.
Scott Barker:
[48:53] Yeah. I’m going to add on my own question on that. At Levelset, did you break… I know this is common in enterprise and strategic, but did you break up your SMB team by type of customer, like persona at all? Or were they all just trained on the same? Well…
Martin Roth:
[49:14] At times, yeah. So for example, we built a waiver, Lean Waivers products that was specific to general contractors. And so we wanted to take general contractor leads, put them in its own funnel and have an outbound motion with that funnel. And so at times, we would select certain groups. Roofing companies was a big customer base for us. And so we had a team that was really good at selling into roofers. And we’d send them to the roofing conferences and things like that. So yeah, we were a little opportunistic with it, but it wasn’t like a made… So as an alternative, for example, like Procore does this or Building Connected did it before they got bought by Autodesk where they’ll have like a GC team and then a supplier team and then a contractor team. We didn’t do that until the very, very end. And that was really more like segments, SMB mid-market versus enterprise. So I guess the short answer is no. Yes, kind of, but not really.
Scott Barker:
[50:10] Yeah. I love it. A lot of good stuff there. And whoever asked that question, it was anonymous, or else I’d call them out, but hit up Martin Roth on LinkedIn. All right, final two questions for you as we wrap up. First question is, what’s one thing that revenue leaders still hold to be true in 2024 that you think is bullshit or no longer serving us?
Martin Roth:
[50:35] I’m going to give three things real quick. Number one, I think that if you’re running, an sdr team a high velocity sales team an smb team i think you need to be in person i don’t think remote sales environments work well for people who are early in their career um for a bunch of reasons i agree and agree strongly agree yeah so that’s number one i think enterprise sales you can you can be wherever because like you got to be on plane trains and automobiles no matter what but for early in your career get in person and if you’re a salesperson listening to this like don’t take a job that’s remote. You’re putting yourself laps and laps and laps behind your peer set in skills development. Get in person if you can. Second thing is, I like to say micromanagement is a good thing. My good friend, Kyle Norton says, don’t call it micromanagement, call it microcoaching. He’s right, I’m wrong. But the point still remains, don’t hire people and let them do their thing, especially not in a sales organization like i made that mistake early on and then i learned oh no you actually have to have a process and a playbook and you have to coach people and you have to support them now every salesperson has to have their own flavor and put their own you know personality onto it but at the end of the day like you have to manage people in a sales organization and i think you see a lot of rhetoric with sales leaders that are like oh we’re just going to hire great people and let them operate like.
Martin Roth:
[52:04] I’ve never seen that work well. So I’d say that’s BS. The one that my favorite here is all of the conversation around how cold outbound is dead. I think that’s total BS. Every good thing in my professional life has come from cold outreach in some capacity. Now, maybe your cold outreach sucks. You need to work on your messaging. You know these guys, huh? The cold calling sucks guys. I’m not trying to make ads for all these books that I keep. Armand Farouk. One of these was that.
Scott Barker:
[52:34] You only get 15% of each book that goes to this podcast, right?
Martin Roth:
[52:38] I would love an affiliate deal for anybody who’s booked. I’m just kidding. I don’t want affiliate deals. No, but so like the reason they wrote this book and it’s actually good. It’s got some good stats in it. But the whole thing is like, it sucks. Cold calling sucks. That’s why it works. Most people don’t do it. And when they do it, they do it very poorly. Cold outreach absolutely works. Absolutely works.
Scott Barker:
[53:00] And it’s a skill you have to learn. I talked about this. Let’s say even in a world where cold calling and cold emailing doesn’t work, if you are not doing that and learning the rejection that comes from that, you’re going to be a much shittier seller, closer, enterprise AE, revenue leader, whatever. Just the act of doing that alone is teaching you so, so much about the art and science of selling, which is interesting. You’re like almost losing the. The byproducts if you’re not doing that, which is grit and resilience and all these things that come by doing hard things.
Martin Roth:
[53:39] Totally. Now, I don’t want to speak ill about your previous employer because we used outreach. We were an outreach customer. But I think that outreach, it’s been a while since I’ve really spent time in that product or in sales loft or any of the other thousands of me too products that have come out. I think it for a time it worked and I think that time has kind of passed in the way that we used to use it which is like a 12 by 12 it’s 12 calls and 12 emails over this cadence high highly personalized works it’s more effective and so the cold outreach works but there is no like set it and forget it version of cold outreach don’t believe what you read on LinkedIn like you actually build a list the list is kind of the that’s the strategy that’s uh stolen from a good friend jordan crawford who’s the he’s in gtm fund you can get him on here that dude is a freaking jedi when it comes to list building and using clay but the list is the strategy if you build your list right and you know your list intimately then you’re going to find ways to get personalized and get creative and get into those accounts cold outreach works i still still from 10 years of calling into large building material suppliers when i go drive around town and i see ferguson or ABC Supply, I still see the logos and they’re singed into my brain because I thought about them every day and how do I get into this account? Who’s another angle? Asking for referrals.
Martin Roth:
[55:03] It’s a, I don’t know how to put that into words, but cold outreach works, but you have to be committed to it. This isn’t like a campaign that you run. It’s just, this is the job.
Scott Barker:
[55:15] Yeah, yeah. I bet you, nothing… Outlined the importance of cold outreach and like shifted mine than than fundraising obviously we we fundraise for our our fund and there’s like especially on the institutional side there is only a certain amount of lps that invest in emerging managers out there so like you have a list of 150 and these are the only people in the world that are going to potentially give you money so all of a sudden you get really fucking creative with your outreach don’t waste it yeah don’t waste it you spend eight hours mapping out every relationship that could potentially get you there scoring them of okay this one looks like the most connectivity let’s check with that one let’s figure out how to make the ask that i’m going to ask this person a give for them what can we do like it completely changes your your way of thinking and it’s never uh set it or forget it these are relationships that you’re building over time and everything you’re doing is getting you closer to that meeting that that next interaction totally yeah yeah um i love it all right final one what is one go-to-market strategy or tactic that’s currently working today for the companies that you consult and advise for.
Martin Roth:
[56:43] The one that I find myself pointing to most often is this isn’t like a hack or some new thing. It’s kind of like what’s old is new again. If you’re selling… $15,000, $20,000 ARR products are larger, so like lower, mid-market, or bigger, go get in person with customers. Once a month, each rep should be in market, meeting with customers. Now, there’s a way to make that more efficient. I always advocate for building territories that are specific to a metro sales area, as opposed to doing a region. So don’t do the Southeast, do like Miami and Fort Lauderdale. And if you’re calling on, for us, it was construction companies in Miami and Fort Lauderdale. Well, I can get really effective whenever I get in market once a month to go meet with people that are in Miami and Fort Lauderdale. Better yet, if I even live in that market. But that’s one thing is the campaign that I would build that’s a coordination between sales and marketing is if you have the budget for it once a month if you have less budget for it do it once a quarter or if you have no budget at all at least go get get in market but once a quarter.
Martin Roth:
[58:06] Do a like a field event go to a top golf or you know whatever the market you’re selling into find a place that they want to convene you know it could be pickleball it could be whatever invite existing customers invite your prospective customers and you create your own mini event you don’t have to wait for the big conference. You can create your own road tour or road show of your brand in market and start with the top five biggest cities. So if in 2025, you picked five cities, you did five road show events, you put enough marketing and sales effort behind it, you made it anchor, you flew the team out there, they got in person, Every single one of those events is not just ROI positive, but becomes this like flywheel for brand and connection. And so that’s a tactic that I’ve recommended a few dozen times. Handful of companies have taken me up on it. And each one of those companies is like, this is working. It’s working really well. Because it’s just a compliment to the outreach that you’re already doing in market.
Scott Barker:
[59:16] Yeah. Couldn’t agree more. that in-person, and as you said, these things kind of come in cycles. We all went like overly digital and everything was there. And now people are craving in-person connection again. But man, this has been awesome. I appreciate the time, man. It was really good to catch up with you, hear your story, love the way you think about sales and scaling companies. And I’m very excited to hear what’s next for you and for folks that want to follow along. With your journey, maybe have some questions for you. Best way to get in touch with you is a LinkedIn guy, X guy. What’s the best way?
Martin Roth:
[59:56] Yes, Anne. You can find me on Twitter or X. It’s the Martin Roth. You can find me on LinkedIn. I post pretty regularly there. And then martinroth.com. My email is martin at martinroth.com. I’m pretty responsive. And I want to hear from you. I love this stuff. I love talking about sales. I love helping founders and executive sales leaders. And I’m working on a new business that is not the advisory work, but in the meantime, I’m available. So hit me up.
Scott Barker:
[1:00:25] I love it. I love it. Well, for all our listeners, thank you for hanging out with us. I say it every week, but listening is one thing, executing something totally different. Hopefully we gave you some ideas, tactics, strategies that you can use in your own business. And we’ll see you next week.
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