The Number 1 Lesson in Leadership
SPECIAL WEDNESDAY EDITION
There have been many lessons that I have learned over the course of my career, but none more important than the following: “Hire people that are smarter than you”. It sounds easy enough, but most managers struggle with this concept. The fear is understandable. If I hire someone smarter than me, then won’t they take my job? I have always looked at team building very differently. If I hire an entire team of the smartest people that I can find, then the results will be amazing. I have learned to check my ego at the door and to take pride in the quality work that my team produces. Just as important as it is to hire smart people, make sure to give your team credit for the work that they do. If your insecurities force you to take the credit for the work of your team, then you will foster a culture of resentment, the output will slip, and the best employees will churn. If you have a team of rockstars that produce at the highest levels, then you can take comfort in knowing that your job is safe. To be clear, intelligence in itself does not automatically make a great worker. A great worker also needs to have a great attitude: EQ is just as important as IQ.
I have decided to go off topic for the first Wednesday Edition of the blog to share with my readers the knowledge that one of my former employees taught me. I was lucky enough to have one of the smartest people that I have ever met work for me. His name is Henry Mizel. Henry taught me the importance of RevOps. Before I met Henry, the term “RevOps” was foreign to me. Surprisingly, the term is foreign to most people who don’t work in tech, yet the value that it brings to any business is immense. If you are a sales or marketing executive (regardless of field) and you haven’t made an investment in a RevOps leader, I can promise you that you don’t know what you're missing. Having an expert build your sales and marketing tech-stack, analyzing your data, managing your KPIs, and validating your go-to-market strategy is the best money that you can spend and one of the most critical components of a successful company. Whether you are a real estate agent, or a landlord, or you are leading a business of any type, this lesson applies equally. I asked Henry to write an article on what RevOps is and ways that companies can leverage it to accelerate growth. Below is his response.
RevOps
Revenue operations is taking its fair share of voice right now and businesses are asking: What is it? Should we be investing in it?
To put it simply, a revenue operations function quantifies a company’s go-to-market strategy. It delivers visibility across a company, aligning teams to enable a predictable revenue model that allows growth goals to be reached.
And yes: You should.
The need is perhaps most obvious in tech (where the role arguably grew from); you’re disrupting markets, challenging the status quo of the industry, and generally charting new waters. So it’s no wonder leaders are seeing the value in someone ensuring the GTM plan is validated by data, that the revenue stack aligns with the strategy, validating growth models, instrumenting the sales team, setting campaigns up to be accurate and actionable, and so on.
What’s perhaps surprising is how traditional industries are behind the curve - real estate being no exception. These are industries where there is a tried and tested model. Sure, you can argue that the business has a more defensible moat, but nothing is impervious to that disruption that comes from someone with the vision, technical know-how, and focus to challenge these industries. Especially given that tech multiples and margins tend to be higher than average and they come well capitalized by VC money. So in that situation you have to adapt and tweak your GTM. Having a team that can squeeze out efficiencies and leverage data to give comfort in forging a path forward is extremely valuable.
This lack of deploying RevOps in real estate companies is significant - a search on Apollo.io, the leading sales and marketing data platform for GTM teams, shows that RevOps associated roles make up just 0.02% of all employees. This is against 1.1% in tech and venture backed companies. A 5500% delta
I’ve heard the arguments before: “It’s Real Estate, we’ve done this for years and it’s how it’s done”. I’m sure Blockbuster said this when Netflix offered them $50m for the company, now Netflix has released a documentary on the last Blockbuster (how’s that for irony?). But here’s the thing, being able to accurately identify the top performers in the sales team and benchmark them against each other, allows you to increase win rates across the organization. Understanding at a macro level who/what your top channels are and double downing on them means you will increase deal flow, with the latter in effect you compound revenue.
INCREASE DEAL FLOW * INCREASE WIN RATE (the amount of successful deals won from the total amount of deals in the pipeline) = $$$
Pricing — this is a huge lever that requires accurate data to get right. When I ran revenue operations at Breather we were able to roll out a model that gave price based on 10s of data points:
renewal rate in that neighborhood
trailing 3 month lead flow for space of that spec
expected short term (high margin) booking revenue: if we knew we would be 2-3x the market for revenue per square foot then we knew selling on a monthly basis would cannibalize the revenue
What is most surprising about Real Estate is how much impact a 1% change in the LTV:CAC ratio could have. As an example, consider a top landlord who has 20m RSF in Manhattan. Assume that the average rent is $55/ rsf and they have 20% vacancy at a given time. That’s 4m RSF vacant, or $220m in annual rent. Vacancy is affected by many drivers, one that is controllable is win rate…
According to a study by Lead Connect, 78% of customers buy from the company that responds to their inquiry first. It’s a phenomenal statistic and one every company should be cognizant of. Enter the RevOps team, who can create a streamlined process to connect the lead instantly to a rep at the point of submission, and/or give the option to schedule a call by surfacing a rep’s calendar availability. One solution that does an exceptional job of this is from Chili Piper. Their solution routes the lead to the correct rep in the most efficient way possible. In doing so, customers see win rates improve by 3x and higher.
Back to the aforementioned landlord. I tested their response rate and from Tuesday it took 4 days to get a call (in the interim I got one very generic email). Let’s say they have a modest win rate of 1% on inquiries generating $2.2m ($180k/mo). Boosting that by 300% means $550k more in MRR, or anywhere from $6.6m to $33m based on 1-5 year leases.
This is fairly basic, and although I’m sure that most companies understand the importance of quick response rate, it is rare that they have a person (team) dedicated to leading this process. Every industry has its own nuances, and absent a well thought out strategy leveraging the right tech, there’s always meaningful dollars left on the table. Oftentimes revenue teams are siloed and a dedicated resource does not own the entire strategy.
Another area that Ops teams provide immense value is in implementing automation throughout the revenue tech stack. The average sales rep spends 32% of their time doing back office administrative tasks, updating CRM, setting follow up tasks, reminder emails and so on. These are the things that create friction from management to reps and distract from the process of creating growth. All of these are relatively straightforward to implement and have an outsized impact on a team’s production, but they are often deprioritized or not funded properly from leadership. Looking at the implication of this: In Manhattan an Account Executive will pull in an average of $140k OTE and produce approx. 3x margin to their cost. That’s $1.86m/year on a product with 30% margin. If automation can give back a fifth of their time, that could be an additional $370k in annual deal flow (more than 3 times the cost of an average Ops professional). So you can see there’s an ROI after just 1 rep; the benefit compounds after that as your sales team grows.
The final point I want to leave you on is impartiality. We’ve all been in meetings where Sales and Marketing are fighting over who generated what and who should get credit. First, remember you’re on the same team. Second, having a trusted team who objectively reports on GTM progress removes the ego and allows constructive and objective decision making from the top.