Janis Zech: Welcome to another episode of the RevOps Lab Podcast. I'm here with Philipp, and our guest today is John McMahon. Welcome, John.

John McMahon: Thank you. Good to be with you guys.

Janis Zech: Yeah. It's a real pleasure. I mean, obviously, we've been following your work quite a bit. You wrote, you know, a book which I think everybody should read, The Qualified Sales Leader. In my mind, one of the best books out there. You know, it comes up — we ask every guest for a book recommendation, it comes up quite a bit. You also host the Revenue Builders Podcast, which is a great podcast interviewing, especially C-level, CROs, COOs, CFOs, mostly go-to-market folks on all things go-to-market. But more importantly, you've actually served on the board of Snowflake for ten years, on the board of MongoDB seven years, after you actually have been a five-time CRO. So today's topic is all about, you know, what can RevOps do to excel in the board meeting, and if they're not there, how do they help the CRO to excel in the board meeting? And we would love to dive into your perspective on that. But yeah, anything to add from your side?

John McMahon: From my side? No. Not right now. Good introduction.

Janis Zech: Well, yeah, try hard, you know, learning from the best. I know you do very detailed introductions. So let's kick off. I mean, so first and foremost, right, like, board meetings have a certain dynamic to it. You've been on many. I think one thing that stuck out when we talked is that when you go into a board meeting, you actually already know what's coming. Right? So what do you typically do before a board meeting happens? And how do you work with companies from a board perspective?

John McMahon: Yeah. So before a board meeting, pretty simple. I just read the board materials. Almost every CEO sends a board package about what they're going to present at the board meeting. Sometimes there's last minute changes, but they send it out a couple days in advance, and that gives the board time to go through all the different slides. And also, a lot of CEOs will write a summary in addition to the board package, which kind of talks about the current state. Think of it as like the state of the union. So it's the current state of affairs. Here's what our business has done, and then maybe here's three to five issues that we're facing, and then that usually gets the board ready to discuss those three to five issues that are maybe, let's call them the big rocks that the company wants to get some advice on, you know, what to do. So that's what I do before the board meeting. In the board meeting — well, before, in between board meetings, I'm typically pretty active with the CRO and the CEO and even sales leaders underneath the CRO. So I typically know — I know before the board package comes out how they did and what some of the issues are in the sales force. So in the meeting, I'm typically fairly quiet because I already know a lot of these things, and I might only give input to help clarify an issue, give my opinion on something if they ask. And then if there's a debate and they want more information, then I might also offer my opinion. But for the most part, I'm fairly quiet because I know what's going on, so none of this stuff is really a surprise to me because I've been involved in the company.

Janis Zech: So you sound like somebody who is very opposite to the VC typically only showing up in board meetings. You're very active between the board meetings. What do you do between the board meetings?

John McMahon: When I first started doing this, people would say, hey, let's get together every two weeks or every week, and let's talk for an hour. But, you know, they're busy people. So what really has occurred over the years is that I make myself available for them. And then when there's an issue, they call, and that could be seven thirty in the morning, seven thirty at night, any time during the day. And it could be a five minute call. It could be an hour. And a lot of times, it might be a follow-up call because the subject's pretty big and pretty meaty. So it could be just looking for advice. It could be, hey, we're putting together a new plan. Hey, we'd like to get your input on this new messaging that we're doing or new ICP. Any of those types of things. And that could be, like I said, anywhere from five minutes, could be hours, could be a half session meeting with the team. So it really depends. And it depends upon the CRO, it depends upon the CEO, and it depends upon the company and what's going on at that point in time. Hate to be so general, but guys, that's really what it is. It's not like this regimented thing that occurs because they might be driving to work, and then they think, oh, you know, McMahon's probably seen this problem twenty times, so I'm gonna call him and see what he thinks.

Janis Zech: I think, typically, it's fairly lonely as a CRO or CEO, and having a sparring partner to either just, you know, get a second opinion or viewpoint or maybe also a course correction can be super helpful, I think.

John McMahon: It is lonely. And I sometimes tell people, look, when you get to the top, you're gonna realize you're on the bottom. Those people don't work for you. If you wanna be a great leader, you work for them and it's your job to make them excel at their job, and if they all excel at their job, you're gonna look like a great leader. But when you get to the top, you're on the bottom. It's not bad. And the sooner you actually recognize that and instill that in your head as a leader, that's when you'll be a great leader.

Janis Zech: Yeah. I think great leaders, you know, try to be humble or are humble, I think, by nature, at least in my book. I think every business needs different types of leaders at different times. One thing that struck out for me is, right, you not only try to engage with, like, the CRO, the CEO, you also try to engage with, you know, people below that who report into the CRO. How do you establish that connection? Is that like an offer that you make to the CRO and then it's sort of like the CRO's job to connect the people who report into them to you, or do you have like some kind of strategy or methodology that you like to apply?

John McMahon: It's not really formal. It just kind of happens. You go to a board meeting, you meet all the executive team, you shake their hands, you get to know them in between the breaks, and they say, hey, you know, if I ever have a problem, is it okay to call you? And I say, yeah, I give them my phone number and my email address. And then it just kinda happens that way. More informal than formal. And I think that makes for a better relationship, too. They don't feel so formal, so they're more apt to open up and talk about some of the issues that they have, knowing that I've probably seen them. Got a lot of scars on my back, scars of experience.

Janis Zech: The only problem is the companies that you're on the board of are very successful. Having that privilege is not for anyone or everyone, I'd say. But one question I had for you was, like, I mean, you've seen so many go-to-market setups. And I think in general, like, building scalable, repeatable go-to-market teams is very, very difficult. Right? When you have an engineering background, I sometimes joke it's a lot harder than actually building product, because the human factor and the scale at which these companies operate is just changing so much — the change is so constant compared to engineering ops where there's a lot less strong change, I would say. I mean, what are some of the common pitfalls you observe when companies grow from tens of millions to hundreds of millions?

John McMahon: Well, it's along the way that they don't grow, or could have grown faster if they paid attention to certain things. So maybe one of the classic examples is — the reps have a six month — in enterprise software, you'd say that most companies have modeled a six month ramp time. So you would think, if it's a company on a calendar year, that in the June time frame, you start to look at, what does next year look like? And how many reps do we have to hire starting in July with a six month ramp time? They'll be ramped by January so that we can make next year's number, which is obviously, if you're gonna scale, it's gonna be a much bigger number. And what happens in a lot of startup companies is they wait — the CEO's inexperienced, the CRO's inexperienced — they wait until November when there's a board meeting. Board members say, hey, you did ten million dollars last year, why don't you do twenty million dollars this year? CEO goes, great, let's do twenty million dollars next year. They're feeling really good about themselves. They go back to the CRO and they say, hey, you're gonna do twenty million next year. The leader says, wait a second, I only have ten reps with an average sales productivity of a million. How am I gonna do that? Well, hire them faster. So then they try to crunch and hire ten people within a month, and you're never gonna get all As. You mostly get Bs and Cs. And at a bigger scale, the sales managers all take the increased quota. They know that they're having a hard time making that quota. They essentially horse whip the sales reps. The sales reps really don't get proper training. They don't get proper time to ramp and understand their territories, so the whole company starts thrashing. Next thing you know, six to nine months later, they have a really bad quarter, they have a bad board meeting, and somebody's gonna pay the price, and it's typically not the CEO. It's typically the CRO that got in trouble because the CEO is a bad planner. So you see that model all the time. Now if they do have a plan, then what happens is they just don't hire the reps fast enough to match the company plan. So if you really think at the highest levels of a company, you only have productivity and you have headcount. That's all you have. Right? That's it. So if the headcount is not keeping up with your increased bookings rate that you have quarter to quarter in the plan, you're gonna miss the number because you didn't hire fast enough. So you see it sometimes when the companies are bigger, and maybe they have fifty first line managers, and they miss the number or you can see that they're going to miss the number. And you stand up and you ask around the first line managers, hey, Janis, how late were you on hiring? Oh, John, I was only late by a month. Okay, Philipp, what about you? Oh, I was only late by a month. Hey, Sally, what about you? I was only late by two months. They don't think it's a big deal. But let's say they have productivity of one point two million dollars — that's one hundred thousand dollars a month. Across fifty first line managers, that rolls up to the top at five million dollars. They missed the number only because they didn't hire fast enough to keep up with the company plan. So when you're really scaling, you have to have this mentality that you're always recruiting and you're always looking for the best people. You never stop. And any time — if you think about what I just said, where there's only productivity and headcount — any time your new hire rate falls below your attrition rate, you're gonna have a bad quarter coming up unless you somehow get a really big deal to make the productivity look better than it really is. Does that make sense?

Janis Zech: Yeah. I mean, I think it makes a lot of sense, and I think we can also transfer this. Right? Like, I mean, it's also the same with, like, pipeline building. Right? Like, you don't build enough pipeline — I think it's rare that you build too much pipeline, but it can also happen — but I guess it's more common the other way around. And you overhire, but you don't have enough pipeline. That's just as bad or maybe even worse, right, I think. So I think there's multiple parts where it's just like this forward-looking part that is just not taken seriously enough and you have these last minute decisions or month-to-month decisions that make it really hard to scale a business.

John McMahon: That's what would be good for your RevOps people — like, anytime I opened a meeting as a CRO, every Monday morning, nine o'clock, it was headcount first. How many people do we have that we hired? How many have hired and are on board? How many ramping reps? How many ramped reps and what's the attrition? I have to know that. If I don't know that, even though I'm constantly trying to increase productivity, if I don't have the heads, I can continue to increase productivity, I'm still gonna miss the number. It's gonna look like we just don't know what we're doing from a sales perspective, but at the end of the day, it's because we don't know what we're doing from an operations standpoint. The other big thing you see that happens is they don't, as they scale, lead with management. So that means they're not hiring a manager and then building a team around the manager. So they still want to hire the sales reps — they finally get that process. But then what happens is they don't have enough leaders, so then they start hiring. Instead of a manager to rep ratio of being five to one, next thing you know, it's six to one, seven to one, eight to one. And that manager, that first line manager, can't handle eight people and make the quarter within a sixty two day period. So what happens is, next thing you know, two or three of those eight people are not getting the attention that they need when they're ramping, and next thing you know, they churn. And when they churn out, that's the number one killer to a productivity model, because in a productivity model, you only have the ramp time, you have the productivity, and then you have the attrition. And the attrition is a killer because with a six month ramp time, you lose a rep — typically, you lose them like nine months to a year in most organizations. Then it takes them three more months to hire another rep. Another six months before they're productive — you lost two years. You can't make it up. So it's almost like a bridge. If you ever see them build a bridge, they put the structures out there first, then they build the road to the structure, right? That's like leading with management. You have to get the managers first if you really wanna keep the productivity number and reduce the churn. And what comes right behind that is sometimes even though they're doing that, the CFO says, hey, why don't we start cutting the number? Increase the manager to rep ratio so we can save some money? And they believe that with that larger manager to rep ratio, they can cut costs. Okay, they cut costs, but then if your churn goes up, like I just told you about, you can never make that up. The costs of churn in a sales force is so expensive, and it's just such a detriment to the bookings model. And then I think, you know, the other thing I see is they don't have an effective training program. So they're bringing in these reps where they modeled six months to productivity, and then what happens is they don't have a really effective sales training program. The managers are out there running hard, chasing the forecast, and they got sixty two days. And literally, that's kind of their job. That's all they're doing — they're not really training, they're not really developing, they're chasing the forecast. And these poor reps that are trying to ramp, they don't really have any deals, so the manager's not spending any time with them. Next thing you know, they churn. And because they don't have a good training program for them, that ramp time starts to increase — seven months, eight months, nine months. Just a killer to the bookings model also. So those are some of the classic examples you see. Maybe the other last one is — you see this all the time — because they originally started and they sold down low in SMB or they sold mid-market. And now they say, oh, let's go up market. That's where the bigger deals are. That's where we really can make our quarters. It's a good idea, but they do it unabashedly. What they do is they take their sales reps that were territory reps, and they turn them all into, like, strategic reps, major account reps, and then it just doesn't work because that's not their skill set. You know? Like — sorry for using an American example — but have you ever heard of this football player, Tom Brady? You heard of him?

Janis Zech: Sure. Yeah.

John McMahon: He'll go down as maybe the most knowledgeable, maybe one of the best quarterbacks of all time. His knowledge of the game is unprecedented. He watched film for hours and hours every day. You put Tom Brady on any other position on the field, on the first play, he fails. Why? Doesn't have the skill set. He's got the knowledge. Doesn't have the skill set. And that's what happens when people decide, I'm gonna take these territory reps, just gonna move them over to these strategic accounts. They have the knowledge of the game, but they don't have the skill set, and they fall on their face. And then all of a sudden, they get a really bad quarter. So those are some classic examples I see all the time. But to sum up, basically, hiring too late, not having the manager infrastructure, not leading with management, having no effective training program to enable and essentially influence ramp time, or creating a culture where people quickly leave, whether that's managers or reps.

Janis Zech: Right. Like, so the fundamental model that you're describing — the core metrics are all deteriorating. And I think the — I mean, also culturally — creating a place where probably the best reps will be a lot harder to attract to. I mean, once you're in that cycle, it's very hard to get out. Right?

John McMahon: Yeah. And, well, another classic example is that, as they add reps into these territories — and this is where RevOps can really play a huge part — you wanna make sure that each rep has an equal opportunity to be productive. And they slice these territories, but the first line manager doesn't really wanna go — maybe Janis and Philipp are my top two sales reps, and I say, hey guys, I'm gonna cut your territory because we got new reps coming in here. And you guys both say, if you cut my territory, I'm gonna quit. So then the manager is threatened and says, okay, I'm not gonna change territory. But then the slice of pie that they give to these new reps gives no chance for these reps to be productive. So then they churn. And it's all where RevOps can help — by looking at each territory and saying, based upon this territory of a hundred accounts and five reps, it should be evenly divided amongst these twenty accounts so that they all have an equal opportunity to make the number. And that has to change every quarter as you're adding more reps, but it doesn't happen. And there's a lot of poor reps — they've gone into companies where that favoritism was played, and the poor reps that were good reps had no chance at making the number. Zero.

Philipp Stelzer: Yeah. We actually did an episode on territory planning. Don't recall the episode number anymore, but if you search for it, our listeners can find it — we covered that topic, extremely important. I'm a hundred percent in agreement. John, I'm curious, like, so what are maybe some, you know, frameworks or methods that you recommend, you know, that the people who prepare the board meeting use to not fall into those traps? Like, do you have some frameworks for reporting or some key metrics that you always want to see? You already mentioned a few, but yeah, curious if you have some holistic framework.

John McMahon: I like to see a five quarter report. So I like to see, you know, here's the last four quarters, and then here's what we're tracking for this quarter, or when it closes at the end of the quarter and you go to the board meeting, you can see the last five quarters. And those trends are really hard to argue with — something's happening or something's not happening. You just can't lie. You can't get away from it — there's a story there. And, you know, one of the top ones we talked about is headcount. I really wanna see the number of hired reps on board, ramping reps, productive reps, and the churned reps. I like to see what is the actual rep ramp time. So a lot of people model it and then they never really look at what the actual is. So if you modeled it at six and it's actually nine, something's really wrong in your model and chances are it's gonna show up sometime in the future as a bad quarter. Obviously, productivity per rep is the most important metric of any metric, you know, that RevOps or any CRO or CEO could have, because if productivity per rep goes up, chances are almost everything on the financial statement's going to look good. It means that you probably made the quarter, probably beat the quarter. Productivity per rep goes down, chances are everything on the financial statement's going to look bad. You're going to have a bad quarter, bad board meeting. It's not gonna be very pleasant.

Philipp Stelzer: And the quota attainment — I mean, how do you look at it? Right? Like, so when you have a quota of, let's say, a million, right, like, what would be your expectations across the entire team? Right? Like, where should they sit in terms of the attainment number? Is that, like, eighty percent, ninety percent, sixty percent?

John McMahon: That's a great question. I used to get asked that question all the time by people that were interviewing, and they'd say, well, what percentage of your reps made the number? And I said, well, that's pretty — I could tell you, but maybe right now it's probably like, you know, fifty five percent or so, sixty percent. Oh, that's really low. I said, well, what you have to remember is I'm a growth company. I'm doubling every year. So there's a huge percentage of my reps that are ramping reps. Now if you wanna take those ramping reps out and you wanna say, how many reps are making quota that have been here, let's say, six months after the ramp time? Okay. Now it's more like seventy five or eighty percent. But to just ask that question, which a lot of interview candidates ask — they're asking the wrong question. They're asking it in the wrong way. Does that make sense?

Philipp Stelzer: Yeah. A hundred percent. So you would say, like, let's exclude the ramping reps. Right? Like, would you say eighty percent is, like, a healthy — if you think about it, if you exclude the ramp reps and let's say ramp time is six months, then there could be a rep — or it could be five or ten reps in there — that are one month past the ramp time, so they probably didn't make the number. Right?

John McMahon: So I like it when you say, how many reps — if your ramp time's six months — how many reps made it that have been here more than a year? You know? And then even as a RevOps person, you should basically, if the company's been around like four or five years, look at the rep participation rate per year, because you want your higher tenured reps to be pulling most of the weight. Those reps that have been there three years, four years, five years, they should be pulling all the weight, right? Because they really should, by that time, have mastered the product, mastered the job, mastered the competition. And then that gives the CRO pretty good security that he's gonna keep his job for a while. But looking at the number of new logos, you know, over the course of five quarters — that can tell me something, especially the number of new logos per rep. Am I starting to scale because I'm adding so many new reps, but the number of my new logos is starting to flatten per rep that I'm adding? That's a dangerous sign. That means some of these reps aren't gonna make money because, you know, you have to get the new account in the subscription business, then you gotta go back and renew them and also upsell them. So that can be pretty dangerous. And then I look at the number of customers. So what was the percentage of customers that came in from new and percent from existing? And then the number of dollars from new and the dollars from existing. And when you track that over the course of five quarters, you could start to see, oh, it looks like my ASP has been dropping in new, and it looks like most of the dollars are starting to come in from existing more than they normally did. Is my sales force getting a little lazy? Are we not going after the new accounts? And as a CRO, your lifeblood is the new accounts. If you don't get a constant flow of new accounts, chances are later in the year or next year, you're gonna probably not have your job. So that can really tell a story. Same thing with churn. What are the dollars and what are the percentage that's coming from churn? Is that gonna tell me a story? And then ASP from new and ASP from existing starts to tell a story too. Why is one going up? Why is one going down? What's going on there? And then you have to start to dig behind those numbers. But those are like critical numbers that your RevOps people should be showing, and I don't see it a lot of times — especially the customers, the number of customers new, number of customers existing, dollars new, dollars existing. So you see the percentages and the dollars. That really tells a big story. The other one that tells a big story is the number of reps that you're hiring versus number of new logos that you're getting. Is that going up or down? If that's going down or flat, it's a warning sign. The number of new reps and then number of new logos for these new reps — my number of reps is going up because I keep hiring, but maybe I was always getting on average, you know, two new logos per rep. And now all of a sudden I'm getting one, one point five, one point four. Uh-oh. What's going on here? Why are my new reps not going out and getting new logos? Something's going on. Now a lot of these things are warning signs, but you have to go out and dig behind the numbers. You have to go talk to the people and figure out, well, why? How come?

Janis Zech: Yeah. I mean, I think it's always about, like, right, like, kind of lagging and leading indicators. And you have your kind of lagging indicators that often I think are the number one metrics discussed in the board meeting. Right? Like, net new ARR, MRR, GRR, but they don't tell you why. And I think what you're alluding to is, like, giving you hints of why those metrics change and what are the changes in the go-to-market org. Right? Like, if you're constantly scaling and bringing on new folks — and I mean, that's the companies you've worked with — it gives you a leading indicator. Okay, maybe the ramp time is a problem, or productivity is a problem, or churn is a problem. Right? So, like, I think really being able to look at the kind of lagging indicator and then going into the leading indicators and then being able to drill into the leading indicators — we had one of the RevOps leaders from Rubrik here on the show, and I think what they do really well is basically being able to traverse into the details and then going into territory, going into geo. Right? Like, really understanding this in detail. I think that's, you know, what metrics-driven management looks like. Right? Like, you wanna basically identify the leading indicators to then essentially create initiatives that change these things. Right? I think that's all what it's all about. Right? The metrics should tell a story of what you should be changing so you build a better company, essentially.

John McMahon: Yeah. What I like doing is — so you have overall productivity for the sales force. Then what I like to do is look at what is the productivity per rep for each region, and even maybe at the second line manager level. Because when you're scaling a company, you start to have like thirty regions, forty regions, fifty regions, sixty regions. Then that quarter, the plan may only call for you to get like ten or fifteen new heads. So now you have to decide as a CRO — and hopefully the RevOps people together — where am I gonna put these fifteen heads? I'm not just gonna throw them out there. So I start to look at that as like an investment portfolio. The market's giving me seven percent while I'm not investing in these regions that are doing four percent. The ones that are constantly doing eight percent and nine percent — that's where I'm gonna feed. So I'm gonna do what I call feed success. The thing you have to be careful about with that is what I call the absorption rate. Like, how fast can a new leader or a first line manager absorb these new reps without churning them? Because remember, we said churn is the number one killer to the bookings model. So you have to look and say, okay, I have a first line leader. He has two new reps. He's a new manager. If I give him another one, there's a high probability he's gonna churn one. Even though I'd like to give him more and he keeps beating the number, I can't do it, so I have to go someplace else. It's an experienced manager and has two new reps. Both new reps have shown that they've already closed their first deals. Looks like they're kinda on their way. Okay. I might feed him another person. So I'm looking at the productivity per rep for each region, then I'm looking at the absorption rate. Like, how many new reps can they take? How many do they have and how many more could they possibly take? Because I wanna make the right investments, and I also wanna minimize the churn. Right? That's my job.

Philipp Stelzer: And is that something you would recommend to do explicitly, or is that an internal model that the CRO and RevOps should develop? Because obviously it could create a lot of motivation, but also counteractive —

John McMahon: No. I don't think it — so that's up to the CRO. So I used to be very open with and try to teach every one of the managers how I was graded. Like, I told them about the bookings model, and I told them, this is how it works, so you're gonna participate just like me. You have to keep your productivity up and keep your churn down and ramp those people as fast as you can. And I was an open book about it. And the more that they're educated on that, the more they understand the why, and that's what most people want to understand. Why? How come McMahon or my CRO is so adamant about this one point? It doesn't make sense to me. So you have to explain it to them and make them understand, hey, I'm measured that way. You're gonna get measured that way. If you wanna have this job someday, learn it now.

Philipp Stelzer: Yeah. Yeah. I think it's really fascinating. You know, we talk about board meetings, and here you are spending a lot of the time of this recording talking about actually, like, the people on the frontline, how to enable them, you know, how to make them successful, how to hire for them, how to make sure that people — as a resource for the organization — are staffed in a well-planned manner and planned ahead. So I think it's really telling, right, and super crucial to point this out. I really like that instead of focusing on all of these lagging metrics —

John McMahon: You can be totally data driven, and it's really good to a point, but we're dealing with people. So you have to also understand, you know, the strengths and weaknesses of your people. And typically, if things go wrong, it's gonna go wrong and you wanna look behind the numbers. I usually go into the categories — I go, it's either recruiting, it's onboarding, it's developing, or it's the leader. It's gonna fall into one of those places. Are we recruiting the right people? Okay. Are we training and developing when they come on board? Okay. Are we developing them on the job, like constant training, and is the leader doing a good job? Or is it plain old leadership? Do I have a leadership problem, training problem, development problem, or recruiting problem? It's one of those.

Philipp Stelzer: I think it's a very healthy message also to spread in the age of AI, so I appreciate it. Maybe to close off the topic — and you already made some connections also to revenue operations here — but like, generally, what is something that you would recommend RevOps people to be, you know, when working closely with a go-to-market leader like the CRO? Like, you know, what's the best way they can have a healthy impact on helping a company achieve their growth targets?

John McMahon: Well, I think they could be, you know, real data driven like we just talked about and try to understand. What I think happens with a lot of RevOps people that I've seen — they just keep getting more and more metrics and metrics and metrics, but they don't understand the insights of what those metrics really mean, and do I really need all these metrics? Like, I need metrics that are going to give me real insight into what's going on. But other than that, I think that good RevOps people can be the eyes and ears of the CRO, because there's