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The Hot Stove Test: Data, Instinct, and the Real Job of a CRO · Rev-n-u Unplugged

• james: If you don't think you need a RevOps hire, you don't need a CRO. Full stop. That's not me, that's today's guests, and it really means it. Welcome back to Revenue Unplugged. Jesse Gomez joins me today with nearly 30 years in sales leadership. He's built and exited his own company before this chapter of his career. In this one, we get into why so many companies dangle the CRO title just to land a better VP of sales. And what happens six months later when the strategic asks come in and that person's never actually been evaluated on them? Jesse's own line from the show, that person sort of loses credibility. We also get into why churn is a lagging indicator, what a CRO is genuinely accountable for, and this is important, and Jesse's hot stove test for pattern recognition versus data. If you're getting value from this show, Hit like and subscribe. It really does help us reach more revenue leaders and bring in more shows like this one. Okay. Right. Grab a brew, sit tight, and let's get into it. This is Jesse Gomez. Jesse, welcome to Revenue Unplugged. it's a joy to have you on the the show and sharing just some of the wealth of knowledge you have picked up along the way of being a CRO. as a way of getting started, I always get my guests to give a bit of a background on themselves so the audience know who you are, and then we'll we'll dive into the topics. Jesse Gomez: Sounds good. Okay. shall I go? james: Yeah, go for it. Jesse Gomez: Okay, so Jesse Gomez, I'm the CRO of Optoceutics. I have spent the better part of of 20 or excuse me, 20 plus years, nearly 30 years, in healthcare. Some some big milestones. I had my own company at one point, had a successful exit, and kind of retired. and this back half of my career has been really about aligning myself with companies that are working on things that really speak to me on a very personal level, and helping them bring their products to market. james: when we first spoke about doing a podcast together, it became very clear that you're quite passionate about helping people. it's one of probably the key characteristics of being a sales leader is that is that coaching side. but what it seems to be that you have a particular passion about is the CRO job and and helping people have success and understand exactly what the the role is. And that that kind of runs through the trends of the topics we're going to be talking about today. How the how does a board know it actually needs a CRO? What does a company need to have in place before hiring a CRO? And what does the role genuinely require in skill sets, accountability, and scope? so really interesting topics to we'll start with topic one. How does the board know it's actually needs a CRO? And I guess my first question around that for you is are there two or three signals that tell you it's genuinely a revenue leadership problem, not a product pricing or ICP problem? That a CRO can't really fix. Jesse Gomez: Yeah. Are there two or three things that genuinely tell you it's a CRO problem? Yeah, I would say one that one is one that comes to mind is messy sequencing. so companies trying to be in multiple channels and there is confusion. I would say I would say that's in large part I would describe that's what I perceive to be a a big part of what the the CRO's role is is to illuminate with clarity what the problems actually are. oftentimes they're misdiagnosed. and and that's been my observation anyway. So james: Yeah. Jesse Gomez: clarifying that's that's my perspective. so yeah I generally I would just say it is more often than not a a evidence of a lack of unification of what the actual problems are can be one way that a the CRO really can add value, assuming that the board leadership is is ready for that. i again if they're if everybody's offering a diagnosis as to what the problem is and there isn't symmetry there or consistency, that's generally I think a good time for a CRO to come in. james: And so we see it all the time. you've probably spoken to a number of sales leaders where they've joined a company as a CRO, they've gone through the diagnostics and and realized that the challenges are are not something a CRO can fix quickly or can meet the the targets that have been set. So is there from your experience, is there a test a board could run themselves? before writing the job spec for this role to actually decide if it's a CRO they need Jesse Gomez: That's a really great question. that I don't know I have a a strong answer for. I gave me I think the answer I gave just a moment ago is is where I would hang my hat. It's that of consistency and understanding. If there is a presumptively, and by the way, this can also go the other way, presumptively even shared alignment and it's wrong. Right. Oftentimes it's and I know you know this, and I'm sure everybody in the audience knows that it's you know more revenue solves all problems. and and that's not necessarily true. I think that can be very detrimental, harmful to a a lot of stakeholders. so I would assuming that the board and the executive team have a strong depends on where they're at revenue-wise, it depends on where they're at in terms of product maturity and percentage of market share, et cetera, about whether or not I would believe that the the job description has been accurately cast and the problem definitively understood. you know, you're on the recruiting side, and I know that you so many job descriptions sort of read the same. about what the the role and the description are. And understandably they're, you know, recruiting and looking for an all-star. But oftentimes the real problems are what's not revealed in the JD. And obviously that makes the the courtship can be a bit challenging once the CRO gets in and figures out that potentially figures out, ideally figures out that it's not what was represented. james: Th one of the things we always ask when when taking a or or working with a business to to create a a job spec is what does success look like in the role Jesse Gomez: Sure. james: and what does failure look like? and a lot of the time that leads to you're talking about a VP of sales, not a CRO. how if that is The mindset. At what point then, from your experience, can you go back to the board and say it's actually a VP of sales you need, not a CRO? And this is what a true CRO does? Jesse Gomez: Yeah, that's a that's again, that's a great question because are you going back to the board basically to say that you brought me in too early and that I'm not the right person for the role and therefore I'm stepping away from the company, encouraging you to bring somebody else in? james: So I think I'll probably asking this i in more if you're talking to the the CEO or the founder that has probably been talk so I I've found that 90% of the time when a CRO's being hired, particularly for the first time, it's usually a board instruction that it's time to do it. but if if after conversations it's worked out that actually what you think you need is not what you need. How should they go back to the from your experience, how should they go back to the board and say, look, this isn't this isn't what we need? Jesse Gomez: I think it's a combination of things. First it begins with do has the CRO been effective at communicating and and convincing the CEO and the re the other members of the executive team that that is in fact the case. Did they did they is the diagnostics of the real root of the problem is consensus there? if it is, then again, going back to the board and saying, oops, we missed, we brought in a CRO, and this is really a VP of sales problem, I don't I don't think that's necessarily a problem, right? I mean, that's james: Yeah. Jesse Gomez: really kind of the point of the CRO, which is to say then if it is a a sales problem, sales methodology problem, an execution problem, then that's something again that the CRO should be able to fix relatively easily. james: Yeah. Jesse Gomez: If it's a product problem. And that can often be the the miss signal because nobody wants to admit their baby's ugly. then that is a that's a not in in most instances it shouldn't be a terribly difficult conversation. Again, if the CRO has done a good job of diagnosing the problem, has the data to support their position. yeah, all of those are fixable. james: so this this moves me on to topic two, which I think is is super important and I think it's one that gets overlooked quite a lot is what does a company need to have in place before bringing a CRO in? And and I want to include the board in this as well. So when you mention this, what what do you mean by that? What what needs to be in place before you bring in a CRO? Jesse Gomez: I think it's gonna be different for every company. I think it's I think that because there's a lot of debate over when to bring a CRO in, and there is some just sort of like rule of thumbs, if you will, that quite frankly I I disagree with by banding and performance and revenue and the like. And I think it as I said before, I I think it's a it's unique to each company. if you have founders that have and and a in a board that has strength in go to market then then you know that might add some credibility to that point about like what needs to be in place specifically Yeah, again, I I I really can't give you specifics, unfortunately, because every company is different. And yeah. And in my james: That's right. Every c it Jesse Gomez: experience right now, I'm I I joined in a very early stage company, pre-revenue. james: Yeah. Jesse Gomez: Right. And I think it was critical because the company had built a sales function and a marketing function and it was really languishing. and I think it had more to do with that is is much to do with there wasn't a a deep expertise on how to do that, how to do that effectively. james: how should they be though aligned in terms of who's accountable for what now and and kind of stepping out, everyone getting into their lane and knowing that they're ready for that? so for instance, you know, the CEO having less control and the board taking reports from a CRO So is there is there anything that needs to be in place in and around that that you think which is a a new step? that they should be thinking about before the CRO arrives. Jesse Gomez: Definitely. and I think one of the big mistakes a company can make is to not ha not be prepared to to relinquish some of those things, some of that authority, some of that access, if you will, to get right to the source. If you if it's been founder led sales and the CEO has been driving it, then you know some people are are are better than others at sort of relinquishing oversight on those things. But again, I I would say I I jokingly tell people all the time that that a good percentage of the time of the CRO is spent managing the executive and the board level relationships. I don't think that a lot of folks have a thorough understanding of what is in scope and accountability james: Mm-hmm. Jesse Gomez: for a CRO, especially and and again, I I I I go back to the point I made a moment ago that that's going to be different by company. But if they've never worked with one or they've worked with somebody who is a VP of sales who maybe carried the CRO title but didn't james: Yeah. Jesse Gomez: you know, have that requisite experience. across business units, multiple market sequencing, different global business units as well. there's just a level of maturity. And I would say that's probably, and most of that maturity, I'm not afraid to admit, comes from making mistakes. james: Yeah. Jesse Gomez: and so I'm not opposed to putting a a a young person into the role that's that doesn't have the requisite experience, but I would just the mandate should be that. in this instance the board and the executive team is going to allow that person the the space considering they they've never done that. james: how would you advise a board, and I think this is a really important touch point, actually sets out and forecasts the first I would say the first half year. and the reason why I say that is quite often a number, a target, they they're like, right, we've got this new sales leader. I reckon I'd be close to bullseye if I f throw a statement out there and said that most CROs are hired for a transformational project, because things aren't going well. and so they're bringing someone in to to solve that problem. And it seems to me that still largely once the hire has been made, overnight, there is expecting to be a change, a turn, numbers hit. you s tend to see a push on new logos when largely the problem is churn. but you're forced to hit the new logo target to build the revenue to achieve what has been set out to achieve. So how would you advise if you had a blank canvas, how would you advise a board to think about what actually should be forecast for a new CRO to achieve? when they're being hired into a turnaround transformational project. Jesse Gomez: Again, company specific. has to be company specific, but is the is the forecast a top-down or bottoms up forecast? Oftentimes these are top down. We need to get to fifteen million to raise our next round. and that is the number one priority, sort of at all costs, to your point. and that would be kind of a red flag. to me is how is forecasting being done now? Is it a combination of bottoms up, tops down? Is it realistic? and and what what were the assumptions that were made to get the company from wherever they're at to where they want to go. I think still again oftentimes I I love what you said a moment ago about churn, which is a lagging indicator. Right. But it is again it to me that demonstrates a level of experience, or in some cases, a lack thereof or understanding of the actual problem. Because if we're waiting for a churn, it's like being a doctor and waiting till the patient dies before diagnosing and figuring out what the actual problem is. Meaning there's a way to figure it out much further upstream. And that's the kind of conversation that we should be having. So Coming in with the expectation to hit a number, of course the CRO is responsible for for numbers. No question about it, for growing company. but you know, without the ability to to to independently diagnose the problem, then you're relying on the assumptions that were made of the folks who opened up the job requisition and and and went out. Like I said before, you know, that is oftentimes where you're trying that process can go one oftentimes relatively quickly without a full in-depth understanding. I personally like to take a little bit more time and and and sign NDAs and and james: Mm. Jesse Gomez: try to get to the root cause and see if I can validate if I am indeed the right person, not just to fix the problem, but culturally as well. And you know, will will I have a a partnership with with the CEO, with the james: Mm-hmm. Jesse Gomez: board, with the rest of the executive team? Do I see that as a as a a possibility or do I see that as a a friction point? and that is oftentimes the challenge. of a CRO. And so again, somebody young who doesn't know how to navigate that, you have to give them the space to to make those mistakes and figure out, I overshot this, I didn't do this quite right. Oftentimes that's that's you know, because they've they've made the mistakes. And certainly that's what I would describe what my career has been like. james: one of the big questions at the moment, particularly when a company's looking at they want to bring on a CRO. Here's a chicken and egg question for you. RevOps, does that become before or after a CRO? Jesse Gomez: Well, ideally it's before because then I then I can start to have a conversation in the evaluation interview process about whether or not I trust the assessment or I trust the data. but it isn't often an initial hire. it is instead very often my first hire when I'm coming into a company and it's one of the roles that I look at. very closely as I'm considering a role because that role is so incredibly important to the organization. We all say, you know, will you make data-driven decisions? Well, I don't have the time necessarily to be building reports day in and day out, but yet I need to look at those reports. and so I I view that role as critical. And so if if they don't have a RevOps person that in that process I'm talking about budget and are they do they consider this something as as integral or or you know again these are the kinds of conversations I think that you can have early on that gives you a sense of, at least for me as a CRO, am I going to be successful here or is this really a company that has maybe done really well but thinks this is still just about logos? james: Yeah. And in your opinion, you say there when you've done roles, normally your first hire is a is a RevOps hire. Would you go as far as to say if you don't think you need a RevOps, you don't need a C R O? Jesse Gomez: If you don't think you need a RevOps, you don't need a CRO. Yeah. james: Yeah. Jesse Gomez: But I mean I even if you have a VP of sales, you should still have a RevOps, a james: You just have one. Yeah. Jesse Gomez: true VP of sales, because the the same thing is gonna hold true with a VP of sales. They're they're reliant on conversion data, all kinds of insights, which again they're oftentimes capable of running. But You know, if the expectation is is that the VP of sales is, you know, kind of this, what's that, what's the saying? kind of the player coach, james: Yeah. Jesse Gomez: then I I don't see how you know, you would expect a VP of sales even to be this player coach and then also essentially run a RevOps organization or unit themselves. james: Yeah. I I think I think it's such a vital part of the the CRO org that it's you have to have that in place or have budget to hire that you might want the CRO to bring their person in, which I totally understand, but it has to be something that's on the radar to to enable the CRO to have the success you're looking for. With that in mind, third topic we're going to talk about is What does the role genuinely require? We're looking at skills, accountability, and scope. In your mind, and this does vary from from company to company vastly, but in your mind, if you're a true, genuine CRO, what are you accountable for? Jesse Gomez: Yeah, I think you're you're I think you're accountable ultimately at the end of the day for the growth of the organization. james: So what rolls up to you? What is your responsibility? Jesse Gomez: For me, it has to be marketing and customer james: Yeah. Jesse Gomez: success along with sales. There is a unified thread in RevOps, of course, strong influence over product, if not owning product. and I know for some that might might feel a little bit like an like an overreach, but these, you know, I think about the CRO, the CCO as the person who is ultimately responsible for everything that it that the customer might touch. this is and and they all have to sync. And so when you split those business units out, my experience has been is that you know the the the the chief customer officer, customer success lead, the marketing lead, they have their own agendas, they have their own perception of how they're seeing the market. And unfortunately their priorities. May often be different. And so I think it's important to have a single person over that. Again, you can really have still really strong leaders and teams, and you should. james: Mm. Jesse Gomez: And that that that that mantra of you know hire really good people and get out of their way is something that I fervently believe in. But they should be leading those business units, but they should roll up to the CRO. The CRO needs to make sure that everything is singular threaded. So the messaging on market sing marketing is consistent with what sales is is representing out in the marketplace. And that loop is consistent all the way back to what we're hearing with the customers that we've onboarded. RevOps, because each of those entities will produce their own data. Marketing produces its own data, customer success produces its own data, and sales produces its own data. I need a single source of truth, which is where RevOps sits. james: Mm-hmm. Jesse Gomez: And ultimately, that data should definitely drive product. And so if we're dependent on what is the market telling us and where is the market going, that's the job of the CRO. It's not just what are we, what are we executing against today, but my responsibility is. Where is the company gonna be 18, 36, five years down the road from now? And so I'm bouncing in between the operations and popping my head back up and looking with a periscope about where the macro economy and and and and and macro market shifts and micro market shifts are happening. and that helps me to come back in. And and have debates and discussions with each of those business leaders to make sure that we are singularly aligned and that the product is properly positioned for where we're going. When quite frankly, each of those leaders is largely responsible for executing. then the CRO has to be responsible for for making sure that the company is moving in the direction that we want it to. james: Based on everything that you've said there, and the different areas that a a genuine CRO is responsible for, what skills does a VP of sales need to have that they're probably not using as a VP of sales, but they would need to have to be successful in a CRO role? So if they're considering being a CRO, they're a VP of sales, what skills should they harbour that they perhaps wouldn't necessarily need in a VP of sales role. Jesse Gomez: I think the ability to model to to assuming they don't run a PL, they're gonna need they're definitely gonna need PL fluency. They're gonna need to understand what makes a business what's a good business v versus a bad business and can they identify that? Do they share a vernacular with the CFO? that is critically important. there oftentimes seems to be this adversarial relationship between the CFO and the CRO, and that should never be the case. But there james: Yeah. Jesse Gomez: should be a shared vernacular, shared a shared vocabulary and understanding. that is oftentimes a big a big gap. Beyond that, again, a VP of sales needs to understand marketing. james: Mm. Jesse Gomez: marketing is constantly changing. we recognize that you know, buyers today are 80% down the road, down the path. it's very hard to be a CRO and not understand how a marketing function works. what are the various roles? What do they what do they do? And then again, I I think the same thing holds true. They're generally accustomed, depending, I don't want to assume too much here, but generally accustomed to driving top line revenue, accountable for new logos, and it's really all top line. maybe they build headcount models and and have have functionality or familiarity around that. But further understanding the same thing on the on the CS side. How are all of these things going to be sequenced? james: Mm-hmm. Jesse Gomez: How do you know when to hire? What numbers will you be looking at that that that validate it's time to hire, time to do for this particular role, considering ramp, all of all of the other things? So there's a I unfortunately I think there's a myriad of skills that that one needs to acquire that probably doesn't they haven't been they haven't been trained on those things, which is why I said earlier, like they either need some autonomy, they need some support. they need some training, they need some guidance, they need some mentorship. james: Yeah. Jesse Gomez: I I it's not something I I've been very fortunate in my career that and you mentioned at the onset, one of the things that I do take a tremendous amount of pride on is is is coaching, is mentoring folks. Whatever success that I've had in my career. is I would you know I would be remiss if I didn't acknowledge the fact that it's because somebody took an interest in me and saw some potential and mentored and coached and trained and what was was a a supporting function for me along the way and so it's my responsibility to pay that forward. I do that for a number of folks. and even my first VC backed role in a board role, these were not skills that that I was sort of inherently born with. so I picked up a lot of these. I'm a member of an association called Pavilion. it's a collection of other revenue leaders, it's a global organization, and so it's small enough that we can have small circles and and communicate with other folks that are solving the same problems. Some of which have been on your podcast before. james: Yes, this is this is true. one of the one of the main things or or or jobs that you'll find yourself doing as a CRO is looking at data, understanding data and reacting to the data. As a VP of sales, if you are not data savvy, is that something that you can pick up and do? Or is that A no no. If you are not in the data, if you are more let's just go get the deal done, rather than looking at the building blocks and the pieces and the data around it, should that be look, give CRO a swerve, it's not for you, or can you learn it on the job? Jesse Gomez: yeah, I think you can learn. I think if if if you've learned how to do if you've learned how to operate a CRM and those kinds of things, then presumptively I'm gonna give you the benefit of the doubt that you're capable of learning anything. the question is is that whether or not it is something that you're interested in, something that you're that you or that you understand the value of. get the data is important. the data is incredibly important, but so are instincts. So is pattern recognition. I I sometimes jokingly say like I don't have to touch a hot stove. When I see it's the burner is red hot. I don't have to touch james: Yeah. Jesse Gomez: it. But oftentimes for folks, you know, you might expect like a one year old to be like, how do you know it's hot? It look you know what I mean? Like and you're like, well I know. And so there is this interesting dynamic that can take place. in an organization where there is this perception of that well just because something was some was one way once upon a time, it doesn't mean that it's that way any longer. And I completely concur with that. But again, I don't have to touch a a hot stove to know that it's hot. james: and before I let you go, i in your opinion, and I know you mentor a lot of sales leaders, CROs, VPs looking to be CROs, when does some when should a VP of sales know they're ready to be a CRO? Jesse Gomez: I I think that's I I think it has to just be something in innate in you that you want to you you want to pursue. I I often try to talk people out of it. it is not if you're chasing the title for the glory of the title, you're going to be disappointed. james: Yeah. Yeah. Jesse Gomez: it is a it can be a it it I love building companies. So what a lot of people would describe as super stressful. the chaos, the the bringing the bringing order to chaos in the midst of what feel oftentimes you know feels like a tornado. People o often describe like we're building the plane as it's flying. yeah, all of that can be scary. and if you're willing to embrace that and and you and that's some and that is something that you that you thrive in. then then the CRO title might be for you. If you're look if you if you're entering it for more money, I would argue you probably do just as well and maybe better with about a third or less the amount of stress and and accountability that comes with being the CRO. So I will oftentimes james: Yeah. Jesse Gomez: try to pressure test people to see if they're really just chasing the title because they feel like it's the natural progression. and and and and and make sure that they know what they're getting into. But yeah, I don't think anything pre precludes anybody from james: Yeah. Jesse Gomez: from being it. Learning learning data, learning spreadsheets, learning how to evaluate a business objectively and then step into the business with a a a plan for diagnosing and then and then fixing it, right? is is something I think most people at that VP of sales level can do. james: So why do you think so many people are chasing the title CRO? Do you feel it might be because the title's been given out too often to positions that aren't a CRO role? And so it looks like there's a CRO club that people want to be part of. Jesse Gomez: Yeah, everybody wants to be in the room, right? Everybody or I shouldn't say everybody, right? As I said a moment ago, I would pressure test and find out do you really want to be james: Yeah. Jesse Gomez: in that room? but I think a lot of people are are curious as to what goes on in that room, I think it feels like oftentimes like it's a natural progression. I've been successful james: Yeah. Jesse Gomez: as a VP of sales. and the next the next step is you know, into the CRO, which again I think is these two misaligned ideologies converging. james: Yeah. Jesse Gomez: it's the it's the board, it's the board and the executive team thinking that they need a a better they're gonna get a better VP of sales if they dangle the CRO title and they catch james: Yeah. Jesse Gomez: the person who is chasing the title. And unfortunately that person Doesn't know exactly what's involved. And the way the job description is written is oftentimes it reads like a glorified VP of sales. james: No. Jesse Gomez: Just, you know, now you're in the room. james: Yeah. Jesse Gomez: but it is a VP of sales role. And then unfortunately, they they get exposed in when the expectation is is that what about this and what about that? And and those things were never really. evaluated in the interview process. Those things were never really the the strategy, the strategic elements, the ex the the the PL efficiency, those things we g were were never really contemplated in there. And so unfortunately that person sort of loses credibility when that when when when those asks are made. and I I think it does a lot to discourage them. And then of course when numbers aren't hit because they couldn't properly diagnose the problem and maybe didn't have the runway or the resources and didn't know what they didn't know. Then then, you know, they're the they're the ones that take the brunt of it. james: Jesse, I really appreciate you taking the the time out, not just today, but in the in the calls we had building up to to recording this episode. and thank you for sharing just some of your insights and knowledge. I think it's I think the topics are all really critical right now. the amount of hiring that's taking place and the challenges that businesses are are having building building revenue. So thank you so much for joining us today. Jesse Gomez: Thanks for having me, James. A pleasure. Take care.