Scaling Enterprise GTM

I. Session Takeaways

Date: February 2024

Mulesoft Overview

• Joined Mulesoft at $1.5M ARR. ACVs were $20K-$50K. Biggest deal was $200K
• Left Mulesoft at $800M ARR. ACVs were $250K-$350K. Had many $1M/$5M ACV deals

Scaling Enterprise Sales

• Scaling Enterprise GTM requires investments in organization, positioning, and product

Greg on scaling GTM

“A lot of people think it's all just go-to-market, but a lot of that progression [to $250K-$350K] was the platform itself and the positioning [of Mulesoft]...We're able to go into, you know, HSBC and do a $10M ARR deal with them because we're going to be the platform to help change the clock speed of their business. So for me it was the maturity of the sales organization but it was also a maturity of the messaging and positioning that really allowed us to really command the bigger deals”

Sales Organization Investments

• Initially, the AEs were too junior. The first change they made was to hire “big game hunters”
  • Internalize that when making this change, the average compensation of AEs will increase
  • Greg initially struggled with paying enterprise AEs $300K OTE versus $150K for the early AEs
  • If enterprise AEs make their numbers, they are worth the capital investment
• Their most successful enterprise AEs were from pure play competitors like Tibco versus Oracle/IBM
  • Oracle/IBM AEs are used to having a “big machine” around them, and will not work
  • In the early days, the most successful AEs they hired were entrepreneurial and builders
• If you are selling a technical product, you will need to build a Solutions Engineering (SE) team. In the case of Mulesoft, all AEs were complemented by a SE because it was a very technical sale
  • Ratio of AEs to SEs was 2 to 1 and remained consistent throughout Mulesoft’s growth
• After 3 or 4 years, Mulesoft built out a BDR team and a CS team to support its AEs and SEs

Narrative/Positioning Investments

• Mulesoft consistently invested in their platform and positioning to scale upmarket
• With each narrative shift, the company targeted new buyers and increased the ACV of each deal
• Greg noted you could add a zero to the largest ARR deal closed with each narrative shift

Picking a GTM Strategy

• There are businesses, like Shopify, that can only serve the SMB. For these companies, scaling a product-led motion is optimal. This is not true for most software and was not true for Mulesoft
• Often, companies try to simultaneously build product-led (PLG) and enterprise motions
• This is difficult because you have to adjust product, marketing, onboarding, pricing, and team composition to successfully serve each motion. Greg’s advice is to figure out where your largest TAM is and pursue that customer and market opportunity with focus
• Mulesoft realized early on that to be a $1B ARR business they had to break into the enterprise
• This became the focus of the company’s investments and strategy
• Becoming an enterprise company does not mean you can’t use PLG to reduce friction and drive acquisition. In actuality, you should invest in these initiatives to make buying easier. Rather, it means that those PLG investments should be made in service of your enterprise focus/motion

Greg on the benefits of focus in GTM

"Trying to bifurcate your sales and marketing and pricing, and positioning and all of that between [enterprise and product-led] to say, hey, we're gonna have one foot on each side. From a web standpoint, from a product standpoint, from a pricing standpoint, from an onboarding standpoint, like, you have to be good at both of those. It's one thing to say, hey, we're going to be an enterprise company, and we're going for large ACVs and we're going to use this product-led onramp to get us there, but to say we're going to try and build, you know, a $500 million business, and $300M is going to be enterprise, and $200M is going to be SMB. And we got to optimize for both.

I'm not saying it can't be done. I'm not sure there are too many examples out there of that having happened. And I think there's a reason for that. I think people realize like it's just too hard on the organization to kind of serve two masters. So yeah, I just, I'm not saying you guys can't do it, but I think it's better to pick one and this is what we're going to be. Figuring out where your big TAM is. Pick the one and then excel at that one."

Breaking into Enterprise

• Mulesoft had two prongs to its approach: 1) use projects to break-in and 2) the CIO story

Prong #1: Project Work

• Any big enterprise customer will have hundreds of large IT projects going on simultaneously
• To reduce friction, Mulesoft landed with “new” projects that did not require a rip-and-replace
• Over time, they expanded to additional projects and began to replace older, incumbent systems
• If your market allows it, look for motions that start with a single use case and expand over time

Greg on project based work

"We had the luxury of you'd go into any bank, any hospital, any airline didn't matter. And they'd have big IT projects going on all over the place, as we all know, hundreds of them. And you basically would try to attach to the new project, and they might have a bunch of old stuff running. incumbents, whatever, and you'd say you know, that stuff's old and creaky and you need to rip it out over time, but let it keep running. But this new project, you need to run Anypoint platform as your backbone for the new project, and then over time, you can start ripping out the other stuff"

Prong #2: The CIO Narrative

• Mulesoft’s API-led connectivity narrative resonated with CIOs. They would tell CIOs that Mulesoft would change the “clock speed” of the business by connecting business systems. As you start to sell million+ deals, your narrative will need to increasingly serve the C-level in addition to the teams that use the product
• Even in these executive sales, projects were important because they let Mulesoft scale over time
• Mulesoft also invested in a pricing model that started small and grew into enterprise license agreements over time. Typically, they started with “core” pricing and would expand to enterprise agreements with discounted pricing 

Greg on figuring out your CIO narrative

"The other [prong] was very much this kind of API led connectivity. This [idea] you need to build a platform to connect everything together. And to change the clock speed your business and that was this very high level sale. Even then, usually there was still okay, there's three projects that are going on. We're gonna do it with those and then we're gonna go wall to wall with it and we had pricing models [that scaled]"

"We did a lot with our ELAs [enterprise license agreements], we had pricing models where we would kind of have this grow into an ELA. They knew we were core base pricing. And they knew if they went all the way out on “cores” the prices would be exorbitant. So we'd end up with an ELA model, but it gave them this opportunity to start small and kind of move into it over a period of time."

Scaling Faster: Breaking Headcount Constraints in Enterprise GTM

• Scaling enterprise sales requires investments in headcount across pre-sales, sales, and support
• The people intensity of the enterprise motion placed limits on Mulesoft’s ability to grow topline
• Unlike many SaaS companies, Mulesoft never grew 400% y/y. Instead Mulesoft’s growth was slower and more consistent over time. As an example, Mulesoft grew 90% y/y for 9 years straight
• In hindsight, Greg would have invested in tactics to reduce the human intensity of each sale to accelerate the growth of the company. A few tactics highlighted are below:

Example: Tactics for breaking headcount constraints

1. Better sales enablement training for the sales organization‍
2. More self-serve tooling like FAQs for customers buying Mulesoft‍
3. Discipline around the team needed to sell. Reduce number of people at in-person meetings‍
4. Create functional experts versus customer experts to service a broader audience with less

• It’s critical to think about solving the headcount constraints early (<$30M ARR), otherwise it becomes hard to sustain high-levels of growth without significant upfront capital investments

Greg on the people constraints of enterprise GTM

"The most painful thing ever when I would see you know...we've closed Express Scripts for a $4M ARR deal and I want to thank the 17 people that helped close the deal. And, and that was, you know, that was painful to look at. Right? You know, we needed this person in accounting and we needed this customer success person. We brought in this consultant then these three pre-salespeople were integral to the deal and on and on and on. That was painful. And what was even worse was when there would be a note that would come across that would say we've closed a 150K deal and here's the nine people that were involved, you know, and you're like, Are you freaking kidding me? Like we look like Oracle now.

I think people can do this now. Certainly a lot with AI, a lot with Zoom. You know, how do you make it to where those meetings are just one person in the room and the rest are on zoom calls and you've got all kinds of you know, FAQs and very you know you we're gonna we're gonna go over the security aspects of it. There's an AE that's on call out of Hyderabad, who is the security guru and can just nail every single question and can demo that part of it. You know, how do you break it up to where they don't have to know the customer but they're incredible functionally. I think we could have done more of that than we did. We went too traditional on some of that stuff. So that's one option. I think that would have made a difference."

Scaling Faster: Democratizing Hiring

• Greg interviewed every person until 500 people. In his last year, he conducted over 800 interviews
• While this maintained team quality, it slowed down the hiring process and constrained growth
• In hindsight, he would have mimicked the “Bar Raiser” strategy from Amazon where independent people within the organization are included in the interview loop to maintain new hire quality

Greg on democratizing hiring

"We made it much more about the kind of the interview chain that they were on. I wish early on, I would have pushed that down and had those bar raisers throughout the organization that we knew were going to bring in nothing but “A” talent.”

Amazon “Bar Raiser” Program Overview

• Bar Raisers are independent and generally are not involved in the day-to-day with candidates
• Bar Raisers goal is to make sure every new hire is better than 50% of their peers
• Amazon believes that every new hire should increase the performance bar at the company
• Bar Raisers are nominated by managers, peers, and other Bar Raisers at the company
• After nomination, Bar Raisers complete training and shadow over Bar Raisers for a few months
• The goal is to decentralize hiring of “A” players by building a network of internal interviewers

Scaling Marketing

• Marketing requires a person with a skillset that resembles a CEO. A great marketer will need to excel at product, digital, growth, brand, and people. In Greg’s experience, these leaders quickly become CEOs leaving “journeyman” marketers
• To combat this, target marketers earlier in their career that are hungry and want to scale
• Given the broad nature of marketing, it can be hard to find one person that excels at each of these skill sets. Whoever you hire, identify their zones of excellence and blindspots upfront
• Embrace this and work with them to complement their blindspots with other hires

Greg on scaling marketing

"I think what happens is that the best marketers have all the ingredients to be the best CEOs and they become those. They become CEOs. I know a lot of great marketers who quickly kind of pass go and went to the CEO role and then you end up with these kind of journeyman marketers, who didn't get to the CEO job, because they lacked, you know, some capability that's fairly important. So I think that's the general challenge in the space and in the function, I think the best answer there is generally I think you want to go earlier in career for the up and comers, generally. I think that's one thing. The second thing is you have to recognize that the marketers are going to have some fairly significant blind spots, because it's just hard for one human to be good at all of those different aspects of it.

You just have to accept that, you know, they're not going to be good digital or they're not going to you know [be great at everything]. I had a phenomenal head of marketing, who had just a complete blind spot for all things kind of brand and web. And I was a marketer from my background, and I basically stepped in and I kind of did his job in those areas. And we had a good relationship because he knew he had a blind spot. I had to get in there and help with those areas. That was fine. That's probably not the most effective way to do it. You ideally hire somebody to go fill in the spots, but I would just say for marketers, know that they're going to have gaps and make sure that they've got enough ability to pull in the right people underneath them to do some of those functions”

• Marketing is hard to evaluate because there are so many strategies to generate pipeline
• Greg watched the pipeline, but he didn’t focus too much on whether marketing leaders hit or miss targets because it depended on the aggressiveness of the goal. Instead he focused on whether they exhibited the characteristics of a good leader. He would ask himself: 

Question 1: Do they focus on the right areas of the business?
Question 2: Do they bring in exceptional people?
Question 3: Do they work well with the rest of the organization?
Question 4: Do they understand the business at the required depth?

Greg on evaluating marketing

“The way I was evaluating marketing was much more on just watching them operate. Seeing where they focus, seeing who they brought in, understanding, you know, how the team related to them, understanding how well they were working with the rest of the organization just kind of knowing, like, were they digging into the right places? Do they have their hands on the business? Do they get up every morning to work on the things that mattered?

I didn't sit there and stare at you know, how many leads we had. We had the funnels, and we had the lead flow and what our leakage was, and we tracked it, and you know, we did all that. It was knowing that they were on top of it and pushing it, but did I get super uptight about whether they were beating their number by 10% or under it by 20%. You know, those are just so much like what they set their goals for themselves at the beginning of the year. I didn't get too hung up on it. It was much more than just my own gut. Maybe it's because I come out of that function, but it was more my gut sense of are they working on the right things? Probably some CEOs have a better answer than that. But that's how I did it.”

Hiring “A” Players

• In CEO interviews, Greg focused on finding “A” players with a  track record of success
• You don’t want to hire someone that is going to use your company to prove their exceptional
• Instead, optimize for hiring candidates that have accomplished exceptional things in past roles

Greg on hiring “A” players

“I'll give you an example. You know, I would interview and accounts payable person and they bounced around. They've been doing it for 20 years. They hadn't had any progress. They were fine. They were gonna do a fine job. And, I would Nix it. Probably in about one out of ten. I would dig my heels in and say we're not hiring this person. This person is a “B” player. And in that example, they're like, Greg, well, you're looking for somebody to be the next CFO. Not everybody's gonna be the next CFO, which was told to me by the CFO. I said, No, that's not what we're looking for. Were not looking for the next CFO. We're looking for an accounts payable person who when they come in, everybody's so excited that they're on the team. They've got an incredible attitude. They've got ideas. They're pushing the ball forward. They're trying to automate their job away. They're not just moving a stack of paper from one side of the desk to the other every day.

Most managers that you have don't really understand that. They don't really get that. Once in a while, like the kiss of death for me when I thought I needed to part ways with an executive was when they would say like, well, I think they’ll be solid. You know, it's like, we're not going to build a great company with solid people. You know, IBM and Oracle and Microsoft have lots of solid people. We have to have exceptional people top to bottom”