Your First VP of Sales Didn't Fail. You Skipped a Stage. Matt Calligan @ ArmorText

[00:00:00] [SPEAKER_01] This episode is brought to you by Fast Ramp to Revenue, the done-for-you new hire sales program built exclusively for cybersecurity companies. We bring the process, the frameworks, the training and the coaching. You bring your content and we customize everything for your market and for your company and run the entire program for you. You don't have to pull a single person off your team to do it. Proven at over 15 cybersecurity companies? Get your new reps selling faster.

[00:00:28] [SPEAKER_01] Visit unstoppable.do to learn more. There's a lot of cybersecurity companies out there who have stalled in their growth. You know, they've got their early customers, they've added their first few salespeople, those founding AEs, but they can't seem to break out. It's almost as if since they've added salespeople, things have slowed down and not speeded up. And everyone when they look at this seems to land on the same answer. We hired the wrong people, we had the wrong AEs, got the wrong VP of Sales,

[00:00:58] [SPEAKER_01] the wrong demand gen person. Matt Kelligan says that often the hire was never the problem. What's happened is the companies actually skipped the stage in their development. Matt is the director of growth at Armortext. He was brought in after the scaling attempts had already failed. And in fact, the board advisor told him as he was joining that he was their last hope.

[00:01:20] [SPEAKER_01] So in this episode, listen to that for three things, especially. First one, the four boxes he says have to go green, have to be completed before a company should really think about scaling their sales team. Think about why five straight years of President's Club often makes a candidate the wrong person for those early sales seats that you're trying to fill.

[00:01:48] [SPEAKER_01] And listen to that for what he cut from his founder's 60-minute demo to get it down to five minutes and importantly improve their conversion rates along the way. Here's Matt. Well, Matt, welcome to the podcast. Thanks very much. Excited to be here. Yeah, this is going to be a really interesting conversation.

[00:02:17] [SPEAKER_01] We're going to talk about those early stages of trying to find your feet as a founder or as a go-to-market person, a startup, and maybe a couple of mistakes that you've seen along the way. But Matt, before we get there, you will be the third person to play the cyber go-to-market talk podcast, spin the wheel game here. We've got six categories here.

[00:02:42] [SPEAKER_01] So if you're listening to this on audio only, just know that the video will be there on YouTube as well if you want to see this, what it looks like in person. But the six categories are, number one, it's personal. Number two, visionary or smoking crack. Number three, differentiation teardown. Number four, overrated or underrated. And number five is the cyber donut hot seat. So you ready to play?

[00:03:05] [SPEAKER_00] Yes, sir.

[00:03:06] [SPEAKER_01] Let's do it. All right. Let's spin the wheel. All right. Differentiation Teardown. Hold that thought. We're going to come back to that at the end of the episode. And we're going to kind of delve into a couple of things right there with you, Matt. But let's get into the real topic today.

[00:03:27] Okay.

[00:03:28] [SPEAKER_01] So one of the things that I know you've heard this, I've heard this as well, is, I don't know if it was a joke or quite what the tone of it is, but the saying that, you know, you've got to get through two or three heads of sales at your startup before you find the one that really seems to work out, right? And usually what is followed by is some sort of statement or discussion around how, you know, they're just not the right fit and they didn't work out and the personality was wrong and the wrong skill set.

[00:03:57] [SPEAKER_01] And they use things like, oh, well, you know, they sat behind their spreadsheets all the time and didn't get in the field. It's all based on, you know, it's the VP of sales fault, right? You have a slightly different opinion on that.

[00:04:08] [SPEAKER_00] Why don't you explain it to us? I do. Well, and it's sometimes that is a good answer, right? Sometimes, you know, whoever you hired is just a bad hire. That's never going to be not a thing, right? But if you find yourself as a startup founder, especially in cyber, going through this churn of one, two, three, which we see, I mean, like that's the average. Three is the average, which means, you know, about 50% of them actually go through more.

[00:04:35] [SPEAKER_00] And it's startling when you compare it to the other executive churn inside of a startup. And that number is usually about 1.2 to 1.3. So there is something specific about a VP of sales job and overlapping with cyber startups in particular that needs, in my opinion, needs to be addressed. The churn is a symptom of a mismatched incentivization model for cybersecurity.

[00:05:02] [SPEAKER_00] And by addressing the underlying factors for why you're not able to get that VP up and spun up and why you can't just grab the bag and run and hire the people and start to operationalize. There are key things that founders can do during this middle stage. I talked about this, you know, the first and the last stage. And I'm referring to like the lean startup model where it's like the whole MVP cycle, right?

[00:05:27] [SPEAKER_00] The build, measure, learn, you know, the pivots, the finding of the ICP, finding your product market fit. And then the end stage, which is scale. And most people know those two stages, especially in the venture cap world and all the, you know, investors and advisory side. But for B2B and specifically cyber, there's some unique challenges. But B2B in general as well, there is a middle stage that has to be gone through.

[00:05:55] [SPEAKER_00] And it requires the founder, but it also requires bringing in someone else during this stage before you can hit the scale stage. The scale stage is where you bring that VP of sales in, they take the playbook and they operationalize. And so the churn, by and large, especially at this volume, if it was, you know, if it was 1.9 or 2.1, I wouldn't have a job. But the reality is that it is, it is multiples higher.

[00:06:22] [SPEAKER_00] And my assertion is that it is due to the fact that a lot of founders, other either unconsciously or consciously being pushed to skip the certain critical steps in order to establish what the sales VP needs to take to market and operationalize.

[00:06:39] [SPEAKER_01] So let's get specific then. What is that middle stage you're talking about that people seem to skip or rapidly go through?

[00:06:45] [SPEAKER_00] Yeah. So if you think about, okay, what product market fit proves? It's not that you are ready to scale if you're in a cybersecurity startup as the founder. What is demonstrated is that one, you know, there's a real problem worth solving, right? You do have the problem solution fit. The problem, the product that you have created has addressed the problem in this limited deployment, that MVP.

[00:07:14] [SPEAKER_00] And that you do have some people who are willing to pay for it, which is all the checkboxes for product market fit. And those are all true. But if it's the founder that has done these sales, one of the things that we see is with cybersecurity, or one of the things I see is in cybersecurity, the founders are often subject matter experts on whatever, you know, product they've built. And in those early days, those first few sales aren't buying a product because it fixes the thing they've identified. They're actually buying access to the founder.

[00:07:43] [SPEAKER_00] And it's usually an introduction through a, you know, a warm network or something like that. So there's the first few deals are relationship driven, they're expertise driven. And it's not something that a VP of sales can just step right in and do. You know, I joke that if your process is still requiring the founder, then what you have is a founder and an AE and a trench coat, right? They're just dressed up as the sales team.

[00:08:08] [SPEAKER_00] But if you cannot demonstrate that you can hand this off to someone else, then the VP is looking for a playbook that just isn't there. And most sales VPs, and this is the two year feedback, well, he just, he didn't know what to do. He just kind of fumbled around and kept trying all these things and nothing worked.

[00:08:27] [SPEAKER_00] VPs by and large, especially ones with 15, 20 years behind them, they come in with a heavy operationalized background and they're really good at deriving efficiencies of a process. But if the founder has not taken the time to figure out and demonstrably figure out what those, you know, those critical steps are in the playbook. And, you know, have they, have they defined that sales motion? Is it repeatable? Proven a non-founder can sell.

[00:08:55] [SPEAKER_00] Proven that that non-founder can scale and then prove that that scale can happen without churn. Then if you haven't checked those boxes, what you're handing to the VP is a half-baked sales motion. And he, generally speaking, most don't have that background to sort of figure that part out. They're ready to take it and figure out how to do it real fast. So there's that middle stage there. Did that answer your question there? Yeah.

[00:09:19] [SPEAKER_01] Yeah. Yeah. So the symptom of this is that what I've seen, you've probably seen in probably many experience as well, is, you know, the, we've got product market fit. We, we, we've proven we can sell this stuff. Now, this is a time to put the, put the gas on the fire. Let's, let's hire, let's scale, let's go for it. Right. And when people come in, there's not much there except, you know, watch what the founder does and just kind of do that thing. Right.

[00:09:45] [SPEAKER_01] The thing that I just add in what you said, one of the things I've seen is, it's amazing what leeway the founder has to create new features and roadmaps on the, on the fly for the right prospects. You would never give to the AE that came in, you know, to try and start being the seller. Right. They have just done the, the gravitas, the experience to be able to do that. So there's that, that whole thing. So in that model, what happens though, right? Is, is the pressure from the board to say, you know, we're going to get going on this, start hiring.

[00:10:14] [SPEAKER_00] Yeah. So that, that's the, that's the part that I think can change that is outside the founder's control. There's just not a lot of incentive to change it. So the, the, the founder themselves, they, they're technical folks, right? Generally. And by and large, they come from a culture of like, I'm not the salesperson. Someone else does the sales, not me. And, and so there is a natural impulse to avoid getting into the weeds on the sales, you know, as a founder there, they naturally are like, yes, let's find someone else.

[00:10:44] [SPEAKER_00] Cause I don't want to be in the mix of this, which is, is a natural reaction based on their, you know, their background usually, but it is actually not the answer. Founders are always salesperson number one. And, and they have to be in that mix because they have to learn those lessons alongside someone who understands how those lessons translate into a sales motion. Because a founder is going to, you know, like you said, they're going to find, oh, that's a new product. We can build that. Let's add that on.

[00:11:11] [SPEAKER_00] Let's, and, and as someone who with a sales background, who also has an understanding of how a founder thinks technically, which is what I kind of coined the Vanguard stage, right? That's the Vanguard. This is this sort of Rosetta stone between the sales and the technical piece. That, that Vanguard alongside the sales in the sales process alongside the founder is observing and learning.

[00:11:33] [SPEAKER_00] And so the founders can, and they have to be involved in those initial sales outside of their, you know, their, their, their personal contacts and things like that. The flip side of this is that everybody in the Valley has fully ingested the lean startup model. And I, you know, I was feeling punchy one time, so I called it the lean startup lie. And it's, it's not a lie. It's, there's nothing wrong with the model. Especially if you're B2C, B2C, the lean startup model works day in, day out, all day long, no problem.

[00:12:01] [SPEAKER_00] Or if you have a very scalable, inexpensive thing that can be just purchased quickly. But in cybersecurity, even beyond B2B, that incentive structure actually pushes VCs to give founders the wrong advice. A founder says, well, I should get out of the sales. The VC and the board say, yeah, you should. Let's hire someone now because you already got PMF. Let's scale because the book said so. And it's not just because the model is instructing it.

[00:12:26] [SPEAKER_00] It's that the fund structure itself is incentivized to find unicorns, not build real businesses. And in cyber, that matters because you can't build a half, you can't just slap AI on a half-baked product and push it into a security deployment. You have to take the time. And the incentives for the investor side of this can steer cyber founders in the wrong direction.

[00:12:53] [SPEAKER_00] And so I personally feel there's some onus on the board and investors and VCs to educate themselves more thoroughly on what has to happen in order to make sure you're bringing a good product to market that actually helps secure, you know, the industries that you're selling into. Because that's what cyber is all about. You don't want something that's buggy and half-baked and that's that you're spaying in the wrist surface area, you know? So, yeah, there's a two-piece equation.

[00:13:23] [SPEAKER_00] Both are incentivized to do the wrong thing. And they have to be aware of what needs to happen in the middle. There seems to be a bunch of contradictions on the list.

[00:13:31] [SPEAKER_01] Because the other thing that I hear is that your best salesperson is the happy customer, right? The one that you've given something to, it delights them. You've got them successful. They're getting value. You know, word spreads fast. And the other side of this, I saw Harry Stebbings, the kind of well-known podcaster and VC. I'll read what he said two weeks ago on LinkedIn. Founders, you need to hear the truth. The game has changed. Going from $1 million to $4 million in year one and $4 million to $12 million in year two and then $12 million to $30 million in year three, etc.

[00:14:01] [SPEAKER_01] After four years of this, you did what Lovable did and Lagor did in nine months. Investors have the opportunity to cost the capital. We have a duty to invest the highest return opportunities. And he's going to basically make the point that if you're coming with the old way of doing it, of this steady growth, you're not attractive to the big funds out there. So I see people hearing that, reading that and going, okay, well, you know, we've got to put the foot down and go after this, right?

[00:14:26] [SPEAKER_00] Yeah. Seems like a mismatched area right there. It's that, I mean, the irony is he thinks he's given good advice to the cybersecurity industry. And again, I'm specific about cyber. There are B2B that can scale, but the 1% to 10% of the fund making back the entire fund returns while 95% just get chopped up and sold off for, you know, parts. That's that, sure, that can work in a lot of different industries, but you can't do that in cyber.

[00:14:54] [SPEAKER_00] And I would actually argue that overcapitalizing and focusing on unicorn capabilities actually drives bad cybersecurity technology into the market. And because it's subsidized, they can offer it at a lower price point than would actually make sense from a business run the business scenario. And so cybersecurity founders who say, no, I'm not, I'm not pushing hard.

[00:15:20] [SPEAKER_00] We're going to take our time and build this right because I know what those people in the seat using my tool need. They get burnt. They get pushed out of the market. So you're actually, you're not just by chasing this unicorn return. I get, I get why. I mean, they've got pressure. They've had, you know, fiduciary responsibility to push these things towards that model to identify those characteristics and incentivize and invest in them because that's what the ROI and fiduciary responsibility drives.

[00:15:48] [SPEAKER_00] And that's the mismatch because it's not that VCs are doing something malicious or wrong. And it's not that founders are, you know, not being dutiful in what their responsibilities are. There's this overwhelming incentive to skip the steps that actually deliver solid, trustworthy security products that actually contribute to the environment

[00:16:12] [SPEAKER_00] instead of just pumping out telemetry and alerts and just adding more noise than signal to whatever hole they're trying to patch.

[00:16:19] [SPEAKER_01] Yeah, I feel like the final thought on that is, you mean, you're saying cyber is different and I totally agree. The other thing is that, you know, the cyber, you need a sophisticated buyer to understand what you're doing is different and how it might impact them. That tends to mean you're working with enterprise, right? You're not necessarily will somewhere, but mostly it means your SMB security leader is usually not a leader. They're more hands-on with a title, things like that, right? The stakes are high at that point, right?

[00:16:48] [SPEAKER_01] You mentioned going into one of the top 10 banks in the world, you know, with a half-baked idea and expecting them to do anything with it seemed a little bit strange.

[00:16:56] [SPEAKER_00] Well, and this is counterintuitive because, you know, to reference another book, you've got that crossing the chasm curve, right? And that holds true in many, many industries, B2B and business consumer as well. But cyber, to your point, cyber has the challenge because the reason cyber security has to start in enterprise is because the enterprise itself, most industries have to worry. They have regulatory incentives. They have financial incentives.

[00:17:27] [SPEAKER_00] They have competitive incentives to identify one. They have a much wider risk profile than a small business does. They have things they have to worry about that a small business wouldn't have to worry about. But then they have the incentive to define those really granularly. And then they have the resources to hire the subject matter expert to address that risk.

[00:17:48] [SPEAKER_00] So the reason cyber generally gets traction first in enterprise is that the people who have identified the problem and know enough to figure out how to solve it in innovative ways have already thought of the issue of what this cybersecurity tool, this subject matter expert has come up with. So you're not going to find that subject matter expert in a small to medium sized business. They are wearing cyber plus IT in general.

[00:18:16] [SPEAKER_00] Sometimes they turn the lights out at night, you know, depending on the size of the company. And so you're not going to find that expertise that appreciates or even recognizes or even needs that sophisticated or innovative capability. And so, yes, cybersecurity, their chasm is inverted, right? It is enterprise first. SMBs, and this is my personal experience, not just observing others. I mean, I have gone through this cycle. It was brutal. But you're going to, the SMBs are the laggards.

[00:18:44] [SPEAKER_00] They're the last ones to adopt these new innovations because they're not required to. There's no laws that say the small ones have to adopt these things to address these gaps, where the large companies do oftentimes, especially in critical infrastructure, have a regulator looking over their shoulder saying, oh, no, no, no. We wrote a law for this. You need to, we're going to audit this because this is something that needs to be addressed in this risk profile.

[00:19:08] [SPEAKER_01] So let's get specific for the founder who's sitting there going, you know, I've done pretty well here. I've got my first, whatever it is, five, 10 customers or my first million, two million of ARR. You know, I now need to take that next step. What are you saying then the advice is about that next step and what that looks like?

[00:19:26] [SPEAKER_00] Yeah. So there's, I kind of blew through this real quick, so I'll kind of revisit it. There's, there's really four, four key things kind of, you know, the lights, all the lights turning green within this middle stage, the Vanguard stage that, that really has to be. You can't skip it. You can't fast track it. You need to check each box. And that, that's why it rounds, runs counter to, and why VCs really don't want to even acknowledge it is because this stage takes as long as it takes. If it takes a year, it's going to take a year.

[00:19:55] [SPEAKER_00] If it takes two, three, there are some that have taken 10. And that just, I mean, that just does not fit the unicorn math, right? And so if, if you're a founder in the seat and you are looking at all of this information that you have kind of obtained from these initial client adoptions and feedback and, you know, rough sales cycles, things like that. The first thing you want to make sure is that you have defined this repeatable sales motion.

[00:20:24] [SPEAKER_00] Like, can I take the same thing that I said here and say it to this new person and get the same results, right? That this, the repeatable process is the key and every sales motion is different. And, and that's, you know, you'll hear founders say that like, like everyone is different. I customize everyone. And the fact is they're not, you know, they've added lots of things to the conversation because they're the expert to this. A lot of flourish and a lot of insights and nuance to the conversation as it moved through.

[00:20:52] [SPEAKER_00] And maybe they saw the various use cases as different, but at the very core, if you sold it more than once or twice, then there are, you know, five or six specific things that repeat as a pattern through all of those. If the founder isn't trained enough in, in sales motion, just general concepts, they might not be able to identify it.

[00:21:12] [SPEAKER_00] And so, you know, you, you would have to go through this process with someone besides you, you know, beside you that has that sales mentality, but isn't under the gun to hit a quarterly number, right? Like that sales VP would be.

[00:21:26] [SPEAKER_01] Let's talk about that then, because, you know, two, two schools of thought in this. One is just hire a couple of AEs, you know, somewhat junior, you know, you direct them and you're, you know, get them just to go mad. And, you know, a lot of activity to where you go, right? The other school of thought is no, hire someone with a lot of experience and gravitas who is your partner in this, that together is building what you haven't been able to build yourself in terms of the go to market. What way do you think is the best way?

[00:21:54] [SPEAKER_00] So it's, it's not, not banging you up on it, but it is, that's kind of a false equivalent, a false binary. The answer is you're looking for a certain personality type, not a certain experience on their, you know, on their CV, right? If you've already identified your ICP, if you've, you've confidently known, no, this is who our ICP is, then you would likely benefit more from bringing on someone with direct experience in there because that establishes rapport. For cybersecurity, everyone buys on trust.

[00:22:24] [SPEAKER_00] It doesn't matter how big or small you are as a vendor. They're buying you because they trust you to come through on the thing they need you to come through on when it matters. A lot of the stuff does sit and wait for the thing to happen before you can deploy it. And so trust is critical, expertise and, and, and being able to speak that lingo and assure them, you know what they're going through in that seat. That's a big deal.

[00:22:46] [SPEAKER_00] So if you've, if you've already done the work to know the ICP, then, you know, that, that super experienced VP might actually make the most sense. But what you're really prioritizing, whether it's, you know, 15 years of experience or five is someone who has been through enough of these various sales experiences to understand what drives sales at its core. I've, I have long held, and there's been a couple of books on this, like Daniel Pink, you know, to sell as human.

[00:23:14] [SPEAKER_00] I believe that sales is the most human process out there. Sales is an extrapolated version of, of a very human interaction, bartering. I got something of value. You have something of value. Let's figure out what, you know, we both exchange. If you've landed a job, you're a salesperson. If you've gotten married, you're a salesperson. If you've stayed married, you're a really good salesperson. Sales is everywhere. And it's a human interaction experience.

[00:23:43] [SPEAKER_00] And so that core understanding of that really helps in, in this process, because that's what you're trying to tease out is where that human process actually weaves through these different narratives. The irony is that your rock stars, your, you know, president's club every quarter for the past five years in a row, those are usually actually not the people you want. Because they have figured out how to take a certain process and just wring the hell out of it. Like figure out how to squeeze every last sale and piece of point of value out of it.

[00:24:12] [SPEAKER_00] They are excellent at that. Here's the playbook. Go hit it. But if you bring in that rock star, they will almost absolutely fail because they're expecting to get a playbook handed to them where they don't have to think about each step. Is this the right step? Did they say this instead of this? Should I say this instead of that? Is this the right language? Is this how they even describe the product? Those are questions that your rock stars don't even want to mess with. Like, no, I don't want to touch that stuff. So it is counterintuitive.

[00:24:40] [SPEAKER_00] The rock stars are typically the ones you actually don't want in that seat. You want to prioritize someone who understands almost the underlying psychology of the sale, whether they got five years or 50 years of experience.

[00:24:51] [SPEAKER_01] Okay. So then we're at the point where we've now got that person. How does the founder work with them to prove that that person can do this on their own?

[00:25:00] [SPEAKER_00] That's the volume. I mean, that's still volume, but it's the thing that founders generally hate the most. And that is, you go out and you do the thing this founder did five or six times, and you do it 100 times. And this is the part where the founder gets to hear over and over and over why their baby is ugly. But you got to hear it. And, you know, the whole, everybody's got a plan until they get punched in the mouth.

[00:25:23] [SPEAKER_00] You know, what you sold for that first year, you know, whatever many number of revenue, those sales were unique and they were special, right? Based on, you know, what I mentioned earlier. But you have to do it at enough of a volume to where you can distill that pattern. And also, hey, you know what? You keep pushing this capability and no one cares. Like, stop talking about it. Like, nobody wants to pay you for this. But guess what? They do want to pay you for that.

[00:25:50] [SPEAKER_00] And founders by themselves don't like to hear that a lot. And so that's why they're so quick to offboard that to the sales. But they have to hear it because that impacts roadmap. That impacts, you know, if a founder can make that call, okay, we're going to drop this capability or we're going to keep it. We're just not going to, we're not going to try and sell based on that. We're going to focus on what these hundred or so people are, you know, saying is the value and what they're willing to pay for.

[00:26:16] [SPEAKER_00] So that's why it takes a salesperson at that interaction level to, you know, to interact with the sales alongside the founder so that they can hear the specific things and aren't afraid to say that they don't want that. Right. Great job, but they don't care.

[00:26:32] [SPEAKER_01] Yeah. What's an example of something that you've had, you've experienced like this where the founder thought it had to be done one way and you realized it had to be done a different way?

[00:26:39] [SPEAKER_00] In a slightly different variation, Armortext is actually that scenario for me. Or the most recent one, outside of some like some consulting and stuff I've done on the side, Armortext really was where that process crystallized for me every step. Because the hilarious stat I love to talk about is when I came in, the demo was done by the founder and it was an hour long.

[00:27:05] [SPEAKER_00] And it started at the top and it went to the bottom and it went through every feature and functionality, all of very valuable and useful in some scenarios. That demo, the actual UI demo takes five minutes for me right now. So you went from 60 minutes to five minutes? Five minutes.

[00:27:20] [SPEAKER_01] Whoa.

[00:27:21] [SPEAKER_00] I actually will tell people that I'll warn them ahead of time. I'm like, I'm going to show you some slides and then I'm going to show you this UI and you're going to go, oh, okay. It's the thing I want. And I'm going to say, yep, that's it. Any questions? I mean, that's literally it. And it's because what we have distilled, like I would sit and I would listen to these hour long demos and hear what the clients would say. And I mean, it wasn't fast.

[00:27:48] [SPEAKER_00] It was not fast because in Armour Text case in particular, it was actually not just innovating inside an industry that already existed. What has turned out to be the case is it was one of the forerunners of a brand new subsector, which is called out-of-band comms. Like no one talked about out-of-band communications five years ago and we've been talking about it for 10. So the process to extract that value was hard because, and laborious, because the people didn't even know what they needed.

[00:28:18] [SPEAKER_00] They were just like, you know, I just, my lawyers keep telling me to get off signal and stop using WhatsApp. And like, I don't know why. And so there was pivoting. There was even pivoting for me. Like I have several variations of our presentation that kind of focused a little bit on the right thing, but really didn't until we finally, it was a client that said, they're like, oh, you know what? You guys are like, you're like the, you're like the classified tier here. You're like the high side in the government. And the lights went on. It was like, that's it. That's it.

[00:28:45] [SPEAKER_00] Because we were trying to like sell this as no, no, no, you have to replace Microsoft with us. And that's a, I mean, Slack couldn't even do that, you know? So for us, once we realized this is a better together story, this is a yes and story, not a, you got to convince eight different departments to get rid of Microsoft. Like who's, no, that's, that's no, you're not going to do that. That's suddenly like the lights went on. And that's when we started really clicking with, with the narrative itself.

[00:29:12] [SPEAKER_00] And so what I spend most of my time doing now, like the full demo slides and everything is about 25 minutes. But what I'm doing is actually educating the client on the questions they're going to get. Like, here's why this space matters. Here's why the tools you're going to be told to look at actually are wrong. And here's why there's a gap in your tech stack. It's because of these trends that are intersecting right now. And no, they didn't exist five years ago. Here's why this tech won't work. Here's why these tech stacks won't work. So there is a gap.

[00:29:41] [SPEAKER_00] This is why you need a tool like us. Here's why we're great at it, but this is why you need the tool. And so I spend most of my time just convincing or at least arming the people in the demo with why they need a tool versus, you know, why Armitext is better than whatever signal or, you know, whatever, you know, battle card style. And so by the time I've gone through our logic and architecture for why we built the product the way we did, I go to the UI and they're like, okay, cool. So it does all the stuff. I'm like, yep, there you go.

[00:30:10] [SPEAKER_01] There's going to be people listening to this though, Matt, who are sitting there going, I can't get my founder to get off this 45 minute demo. I keep getting told, you know, the old thing, sell this feature, sell that feature, you got to sell this and all this sort of stuff. What tips would you give them? But how to, how to broach that internally to say, look, there's going to be a better way.

[00:30:29] [SPEAKER_00] Close. You close business. That's what the founder, the founder is pushing you because the founder doesn't trust that you're actually doing it correctly. Right. The performance is the only thing. And yes, it's going to take some time. You're not going to be able to hit quarterly numbers out of the gate in this particular stage. But, you know, when I came in, they, the, the various attempts at scaling had, I came in after that.

[00:30:53] [SPEAKER_00] And, you know, what one board advisor actually told me, like he said, I was, I was kind of like, you're, you're our last hope here. Like I'm, I'm not, I don't think any of this is going to work for us. The founder, I mean, you know, not the founder, he's, he's, he's been the evangelist the whole time. It's the thing that keeps this whole company going. But I was brought in after all of these attempts to scale had happened. And I even tried to scale the whole scale process at first.

[00:31:18] [SPEAKER_00] And I quickly realized you can't cold call the sock, you know, you can't, you can't, you know, do the old school outreach in, in a cybersecurity environment. And, and that's when I started, you know, going back to, you know, the original conversations and we started working through it together. But the, the evidence and proof of progress is where you're going to get that founder to let off, right? And where you're going to have, you know, your own ground to stand and say, no, this is actually what's working.

[00:31:47] [SPEAKER_00] Here's why. And so that's why it's so important to understand why it's happening underneath. And, and founders haven't spent all their life learning how to sell. And so they, they shouldn't know those things. But I think the onus is on salespeople to understand why people buy, not just like, how do I sell it? And if you can do that and you can make a logical argument of why and show, you know, empirical evidence that we're making progress, they'll ease off.

[00:32:12] [SPEAKER_01] They'll start to be like, okay, your call, go for it. Now, the danger here, of course, is that you keep optimizing what you're doing for till the cows come home, right? You're sitting there going, I'm not quite ready yet to scale. I'm not quite. How do you know you're at the point to say, okay, we should now put the foot down?

[00:32:26] [SPEAKER_00] Yeah, no, it's great because it's a really key inflection point. Because up to the point where you're ready to scale, runway preservation is paramount because you're, you're not going to be able to satisfy. If you're doing it right, you're not going to be looking like the unicorn, right? And so you're not going to just kind of get into that, you know, higher, higher round valuation model where you can just get the next seed round or C or, you know, B round or whatever at this higher valuation so that you can pay off the previous folks.

[00:32:56] [SPEAKER_00] If you're doing it right, you're going to have organic growth and organic growth does not look like a unicorn. So for the, that pre-scale moment, you're, you're preserving that runway. So you don't run out. As soon as you hit, as soon as you hit this pivot moment, you, you floor it. And that's a, you got to change mentality. You really do.

[00:33:13] [SPEAKER_00] But the, there's the first step is, you know, we, you know, work with the founder to actually define the repeatable sales motion around the capabilities of, of the product that add the value, right? That's, that's take the PMF lesson and validate it in a repeatable manner. And then prove that you can go through as the non-founder, go through this process a number of times using the same model and actually close business with it.

[00:33:42] [SPEAKER_00] Once you can do that, prove that you can do it at scale, which means not just, you know, one deal or two deals, but, but multiple deals where you can start to predict timelines. It starts to look like a quarterly pipeline and you're still using that same playbook. So it's, you know, can you sell it? Can you sell, do it at volume? And then this is something that a lot of people don't even think about.

[00:34:05] [SPEAKER_00] Can you start to introduce lower skilled sort of junior sales people into the process without churn? Because, you know, again, if, if the, if that, the Vanguard guy needs to be just as good as the founder, then that's, that's not repeatable. You need to be able to hand this motion off to lesser skilled people that can do it faster and faster without needing to have that market, you know, that, that breadth of knowledge.

[00:34:32] [SPEAKER_00] And so the churn piece is a really key piece too, is like, are you diluting the product or introducing people that don't have that skillset? And because of that, you're, you know, you're, you're dropping the ball on onboarding, deployment, support, you know, hearing client feedback on things that need to be fixed, things like that. Once you hit those things, then yes, rock and roll.

[00:34:51] [SPEAKER_01] Rock and roll, right. So the stats now are, according to Richard Steen and his IT Harvest dashboard is about 4,250 vendors in cybersecurity, not including MSSPs and resellers, things like that. Something like almost 2000 of them have less than 20 employees, right? And they didn't all start yesterday, right? They'd be, many of them be stuck at that, that range for quite a while.

[00:35:16] [SPEAKER_01] Would you say that many of them were kind of stuck in that mode of, we haven't actually found the, either the PMF or the go-to-market fit to be able to break out of this and they're just struggling to get there? Is that, is that kind of one of the ideas?

[00:35:28] [SPEAKER_00] I would say a portion is, yeah. Yeah. I mean, there's, that's, that would be a fair assumption. I wouldn't say, you know, I would say there's likely ones that are probably, well, okay. So it depends on their, it depends on their runway scenario, right? You know, are these sub 20 employee, how many of them have runway, right? And, and is, are they limping along subsidizing, you know, their business hoping to hit that unicorn step, you know, that hockey stick.

[00:35:55] [SPEAKER_00] And if they're limping along being kind of subsidized by, by investor money, then how are they demonstrating progress through to the point where they can say it's time to scale? Others, I would say, yes, there you can, you know, if the, if the founder refuses to get out of the sale, it will overcomplicate it. You will get to the point where the sale should be simple.

[00:36:17] [SPEAKER_00] And if you bring in those technical people, it can actually go off the rails and go down rabbit holes and, you know, introduce things that, you know, might be valuable, but aren't salient to the, you know, to the, to that process. So there's a number of things that could explain that, but I would say one, yeah, certainly I'm sure a good bit of it is, is that lack of a defined process of how to hand this over to someone that can scale it.

[00:36:40] [SPEAKER_01] Let me, let me shine a light on something that I was thinking about as you were talking about, you know, trying to get out of this stage. One of the things that's really hard for anyone right now, teams or an individual is to get enough access, enough at bats on their own to get to the point where I've done this 10, 20, 30 times, right? It's like, it's not like you just bring someone in and they just, okay, the first couple of months, I just lined up 30, you know, high quality calls. It's a big challenge, right?

[00:37:06] [SPEAKER_01] So what they, what people try and do is solve that and say, well, let me bring in some more people who give us access or let me work with partners who might get, you know, partners right now are an awesome channel for the right companies to get, get those meetings. But you kind of need to have a lot more in place though. It's like, you know, it's like, where's the, where's the car before the horse on this, right? To be able to get the enough at bats to say, yeah, we should scale.

[00:37:28] [SPEAKER_00] So you're, you're saying how, how does, if, if you need a hundred or whatever the magic number is of these in order to distill the process, how do you, how do you line those up? Where do you go find them?

[00:37:38] [SPEAKER_01] Yeah. If you go one or two people except for the founder are doing this, you know, that's, that's a big number to chase. It might take them a long time to get there.

[00:37:46] [SPEAKER_00] Yeah. And that's the, it takes as long as it takes part, unfortunately. But yeah, I mean, it's, it's the same. It's, it's, there's no new channel out there. I would say one of the dangers actually is trying to deploy a partner program the way a traditional established tech does too early. You will, because it sounds like a really great idea. Like I'm just going to get SHI and Optiv and GuidePoint and I'm going to convince them to go sell my stuff and then they can go sell it.

[00:38:15] [SPEAKER_00] And I don't, I don't have to hire the team. That's the volume. That's what I need. And it, that makes sense if you're in a position, if what you're doing is something that fits neatly inside the existing sales teams, you know, go to market themselves. I mean, they tend to focus on the high volume stuff. That's why the, you know, Microsoft migrations and the cloud migrations and all of these big 10,000 seat deals are what most of these, you know, large resellers and partner channels focus on.

[00:38:44] [SPEAKER_00] But I'd never, up until recently, I, my inside Armotex hadn't had much success in generating that excitement around Armotex because they, they just didn't know how to have the conversation. They didn't even know what to listen for to like, oh, okay. So it sounds like you're looking for this then. Like they're just too busy with a hundred other vendors that, you know, are easy to sell and they can just crank them out and networks and firewalls and whatever.

[00:39:07] [SPEAKER_00] And so the traditional way of getting channel to sell can present challenges and can be kind of a red herring where you put too much effort into it. But you do need channel if you're going to be in cyber because you have to sell into enterprise and enterprise likes to buy through channel. I ended up kind of doing this ask backwards sort of reverse channel program where we would go find the end user, you know, get their buy in to get the product and then ask them what channel they wanted to buy through.

[00:39:36] [SPEAKER_00] And then they were like, whoever guide point or Optiv or what have you. And then I would go to, at first I would just went to go to Optiv and they're huge too. They're no CDW, but they're huge. And it was very tough to cut through that noise as this tiny little vendor. So then I went to the distributor and the distributor didn't care. They're like, sure. And now, now all of them can buy us. So I kind of like have this ask backwards channel partner where I'm bringing leads to the channel just so we can sell. But you need that up front because that's how enterprise buy, you know, that's part of that process you go through.

[00:40:06] [SPEAKER_00] The other channels are pretty, there's no new way. I mean, one of the, as an insight, the area that we stumbled on that turned out to be a really, really good force multiplier for Armortext in particular, this wouldn't be for every cyber tool out there. But we found that there were a lot of threat sharing communities inside regulated industries that were really, you know, they, it was sort of, they had a lot of heartburn about using the free tools that were out there.

[00:40:34] [SPEAKER_00] The free Slack channel and the Discord and Signal Chats for sharing their site, the CTI amongst themselves, as well as sometimes when you have nonprofits like ISACs, who kind of are consolidating that and distributing those channels, you know, because they didn't have the money to invest in and buy something custom built for it. People had a lot of heartburn and it actually impacted the community. People would not share sometimes because of the tech that they were using to distribute.

[00:41:01] [SPEAKER_00] And, you know, I've heard people talk about some of these huge Slack channels and they're like, I know how easy it is to download, you know, the entire transcript from a Slack channel as an admin. So these channels, I'm in listen only mode. And so we had a couple of really early wins with certain ISACs who had some regulatory pressure and hadn't been able to find something. So we actually gave them the tool. They started distributing it to their members and I would do like just quick training. I would just call each of them and say, hey, here's how you use the tool.

[00:41:31] [SPEAKER_00] And they started asking questions like, you know, what happens in a cyber incident? Can we use this for that too? And that actually turned out to be the force multiplier for us. It was like a sort of POC that is ongoing POC for all these various critical infrastructure entities inside the CTI community. Again, that turned out to be the channel for us that lent itself to a very, you know, sort of force multiplier moment.

[00:41:57] [SPEAKER_00] Others would be different, but that's kind of the creative thinking you have to have.

[00:42:02] [SPEAKER_01] If I'm in the market right now and I'm looking at joining an early stage startup, I see the phrase with a job title on LinkedIn, founding GTM or founding AE or something like that. I think that's kind of what they're saying. I'm the first salesperson in or salespeople in. What questions should I be asking the founder to really figure out what stage they're actually at versus what I'm being told is the scenario?

[00:42:26] [SPEAKER_00] I mean, the first red flag, it's more like looking for red flags. I would say if the founder can't tell you what the sales motion is, if they can't tell you what their ICP is, if, you know, you can... Some of this stuff is hard to just, you know, tease out in an interview. But, you know, especially if it's a small startup, you probably will be talking to the founder at some point.

[00:42:46] [SPEAKER_00] And so I would ask those questions and around the sales motion itself, like the think of a sale and think of the things you're going to need to know in order to do the sale and ask, are those pieces here? What is my playbook look like? What industries do we focus on? What is our ICP? What, you know, what is the procurement process look like? How do they buy this? How is it priced? You know, how often is customization required? I mean, that's a big one, right?

[00:43:14] [SPEAKER_00] You want to think through the sales motion in each of those steps and what you're going to need as a salesperson in order to, you know, do this real fast and get those. Those are very specific answers. And as a salesperson, you should be able to smell a bad ICP description, right? When people are like, well, we're just going to get like 1% of this market and we're locked in. It's like, that's not an ICP. Sorry. Or everyone needs our stuff, right? Yeah, everybody. Everyone needs this.

[00:43:41] [SPEAKER_00] Like, yeah, if you like, you know, as an example, Armortext ICP is a mid-level analyst or a SOC manager needing a secure out-of-band collaboration platform that is capable of meeting their compliance needs while they're disconnected from their network and still need to execute on their IR plan with their team in a collaborative space. I mean, that's our ICP. And of course, it expands from there. But that's kind of the tip of the spear. And that's a pretty easy LinkedIn profile to find, you know?

[00:44:10] [SPEAKER_01] Well, Matt, let's go back to our spin the wheel game. All right. So I will tell you, you're the first one to land on differentiation teardown. So this is new for all of us. So basically, this works is I'm going to, you'll see in a second, I'm going to ask you two questions. And then based on your questions, we're going to talk about how to make your answers even better. So let's do the reveal right now.

[00:44:35] [SPEAKER_01] So play along as if I'm your ICP, that mid-level analyst asking you questions, all right? Okay. Number one, what does Armortext do?

[00:44:44] [SPEAKER_00] Armortext is a end-to-end encrypted collaboration platform designed to protect your critical communications during a cyber incident while keeping your lawyers happy around things like audit trails and governance.

[00:44:58] [SPEAKER_01] Okay. And next question is, how is that different to your main competitor?

[00:45:04] [SPEAKER_00] It's different. So there's two things. I'll define competitor as what we replace. And there's two buckets of things that Armortext replaced. We're never going to replace your Microsoft environment across your workspace. That's, you know, don't, I would tell you, no, don't do that. First sales guy that will tell you that probably. But what we do replace are the shadow IT messengers that you're probably not telling your legal counsel you're using for a real incident where you can't use your network.

[00:45:33] [SPEAKER_00] So in the cases of that, what we're replacing are usually the freebie tools. Signal is a big one in the U.S. WhatsApp is big outside the U.S. Mattermost. What's the other one? Everbridge. There's a couple of like tools that were built for something else that they've been told to use or things that they just sort of, you know, things you found that are free that no one, you know, gave you money to actually fix.

[00:45:55] [SPEAKER_00] So that's what we replace usually in our competing and how we differentiate against those is the end-to-end encryption model. Actually, not only does it secure the communications during your incident, during this critical operation, but along the way, we are also encrypting for your audit trails and we are maintaining your, you know, your corporate compliance policies around data and access controls, MDM capabilities.

[00:46:23] [SPEAKER_00] All of those things are baked into this enclave so that at the end of the incident, you don't have to worry about exporting or scanning all your phones or anything like that in order to make sure you don't get fined by the regulators. It's all baked into the platform. You can just, you know, call it a day and log out knowing that all of that stuff is still in there and anything that your general counsel might ask for, it's in there already. So that's why we differentiate against that.

[00:46:52] [SPEAKER_01] All right. So let's talk about a couple of different ways then to think about maybe do this a little bit differently. So the first question I asked you was, what does Armortex do? And you gave me the, you gave me two things. You gave me the factual, this is what we do. And then you gave me the outcome, which is it keeps the lawyers happy and things like that, right? I think the one thing to think about is what people are actually asking when they say, what does your company do? They're not, they don't actually know what you want to know what you do. What they want to know is what you do for them. Right?

[00:47:20] [SPEAKER_01] So one way to think about this is how can you empathize or relate to them in the first part of your answer? All right. Now you might not use these exact words talking to someone, but the way to think about it is, you know how when, right? So you know how when there's an incident and everything's going crazy and this calms us down and you're trying to figure out how do we communicate when you can't even use whatever the standard tools are, you know, and you're wishing there was something more reliable. That's what we do.

[00:47:48] [SPEAKER_01] And we do it in a way where you're happy, your lawyers are happy, you know, where you then kind of go to the outcomes, right? You maybe drop in the end-to-end encryption and the security and things like that, right? But I think being able to relate to someone at the gate to say, you know, if someone believes you understand their situation and their problem intimately, they're much more likely to believe you have the answer and the solution as well. Right? So I would think about like, how do you start off with that, right? Now it might mean if you're a black hat, you have to say, well, tell me a little bit what you roll, right?

[00:48:18] [SPEAKER_01] And then you adjust it depending on what you hear between the stock analyst, the stock leader, the CISO, whatever it might be, right? But I think that's one way to think about it.

[00:48:26] [SPEAKER_00] No, it's a great point. And that is an inflection point we are in the process of. And it's not... So you actually qualified the question by saying, I am that mid-tier analyst. So I literally like zeroed in on what generally they're looking for in a tool like this. But if it's a CISO and I'm at a black hat event and they're like, so what do you do? And I'm, you know, out-of-band comms. What is that? Then yes.

[00:48:53] [SPEAKER_00] And that is actually an indication of our market maturing. You know, just like our demo went from an hour to 20 minutes, the description of what we do goes from what I just did to, you know, we protect those who protect everything, right? We allow the, you know, critical industries that keep our world running to have their crisis responders to the ability to act without fear or delay. Like, you know, there's terms we're still messing around with.

[00:49:21] [SPEAKER_00] Like, how do you encapsulate the feeling of what this is as opposed to, well, we have a patented end-to-end encryption device and blah, blah, blah. You know, so yeah, no, you're spot on. We do need to simplify and start to use terms that have a much heavier emotional connotation than a technical description. And we're pulling in that direction. I'm encouraged to see that people are asking us to go faster because that means the market's maturing.

[00:49:49] [SPEAKER_01] Sure, sure. Second idea for you on the second part is how you're different to something is I think often the temptation, especially in cybersecurity, is you get very factual and feature by feature comparison. You know, they suck at this and we're really good at this, right? And you should really want this good stuff kind of thing, right? I think that at the end of the day, to your point, understanding how people buy and the psychology around it before, right, is just thinking, well, how can I attach to something a bit bigger than having better features? So what might that mean?

[00:50:19] [SPEAKER_01] And I've got no experience with BarberTech, so I'm really just making this up and thinking out loud here as I say this, right? You might want to think about something that's like, so I would ask, you know, my team's using Signal all the time. You know, how are you different to them just using Signal, right? I might start off by saying something like, look, we just think it's just not right. That in times of crisis, the only option your team has is to use whatever favorite tool they have that's hiding away in their phone somewhere.

[00:50:49] [SPEAKER_01] And you get no visibility into what's going on. You get no track record, no audit trail in these times of crisis to really figure this out. We just don't think that's right. So what we've done is built something that has all the functionality and flexibility of Signal, but it gives you everything else that you need as well from a company standpoint. And you can build into your SOPs. So it's not a make it up as the incident happens. Everyone knows this is how we communicate using these tools like this.

[00:51:18] [SPEAKER_01] And we're, you know, we do it. And then we might add in there a couple of things. For example, what we've done is built it this way and we built the design decisions we made. We're in support of this whole idea, right? And then you just got to take it up a level, you know, into something a bit more than just, you know, our blue widgets rather than their blue widget.

[00:51:35] [SPEAKER_00] Totally. Yeah, it's the evolution of this conversation has gone from a like hard, fast, stump the chump session that lasts, you know, 45, 50 minutes where, you know, these technical guys are going, yeah, but what about? Yeah, but what if this happens? And so you do get into the weeds real fast in those conversations. But to the, you know, comment I just made about, you know, this market that didn't exist,

[00:52:02] [SPEAKER_00] you know, in its form today, five years ago, as it matures, that underlying technical, like, this is what we need, and this is why we need it becomes established in each organization. So you don't, you don't have to, you know, guide them through the process nearly as intricately. You can just say, well, you know how you need to do this thing because this doesn't work. Well, that's what we do. You know, you can get to that stage.

[00:52:29] [SPEAKER_00] And I'm, I drag my feet on doing that because I, I'm always, I, you know, we've, we've gone down the wrong narrative path a couple of times. And I don't, at this point, I don't want to be in a place where we have to course correct because a competitor has figured it out. We, I want to make sure we're staying ahead of it. So I'm very cautious and slow to simplify and adopt ways that people are describing this back to me, but it does have to happen. Right. And, and your point was spot.

[00:52:58] [SPEAKER_00] I actually liked, I liked how you did that. So I'm going to steal it if that's okay.

[00:53:01] [SPEAKER_01] Yeah. Yeah. Well, Matt, thanks for playing along and thanks for joining us on the podcast. We wish you every success for the rest of the year into next year as well.

[00:53:08] [SPEAKER_00] Yes, sir. Thanks, Andrew. Appreciate it.

[00:53:21] [SPEAKER_01] Hey, Andrew here. One last thing. If you enjoyed this episode, will you do me one small quick favor? And that's just send it to a friend. Simple as that. Your podcast player will have a share button somewhere. Click that and then text it, Slack it, email it, whatever's easiest for you to someone, you know, who you think might want to listen. That's the best way you can support this show. And I really appreciate you for doing this.