Sales Organization Dashboard

STRAMGT 351: Building a Sales Organization

Stanford Graduate School of Business | Winter 2025 | Instructors: Josh Goldberg & Danny Pira | Student: Doca

Guest Speakers

10+

Frameworks

10+

Case Studies

25+

Curated Quotes

📚 Course Overview

This course explores the fundamentals of building a world-class sales organization. From product-led growth at Atlassian to enterprise sales at Stripe, we examine how leading companies structure, compensate, and scale their sales functions. Special focus on ethics, culture, and the intersection of sales with product and marketing.

🎯 Big Idea

"Build the parachute while you're falling." Successful sales organizations evolve with the company. There's no one-size-fits-all playbook—the right model depends on your product, market, customer segment, and company stage. The best companies think holistically about GTM, culture, and long-term unit economics.

🔑 Key Takeaways

Sales is a lever on strategy, not a function. The best companies view sales through the lens of: (1) product market fit, (2) scalable unit economics, (3) ethical culture, (4) continuous forecasting and learning. Compensation, team structure, and quota systems are levers—choose them deliberately.

📖 Course Structure

Weeks 1-2:

Sales Fundamentals & Economics (CAC, LTV, unit economics)

Weeks 3-4:

Models & Scaling (PLG, Enterprise, Hybrid approaches)

Weeks 5-6:

Culture & Ethics (incentive structures, leadership, accountability)

Weeks 7-8:

Real company examples (Atlassian, HubSpot, Stripe, Dropbox, etc.)

Jay Simons

President, Atlassian

Tenure: 12 years at Atlassian

Outcome: Built from Australia to $2B ARR, ~$70B valuation

Financial Model: 50% R&D, 17-18% S&M

Philosophy: "Bought not sold" - product-led growth approach

Board Roles: HubSpot, Zapier; Investor in Postman

Background: Enterprise sales → Marketing career

Brian Halligan

Co-founder & Chairman, HubSpot

Company: HubSpot (~$40B market cap)

Innovation: Category creator of "inbound marketing"

Prior Role: SVP at PTC (worked with Kirk Bowman)

Education: MIT MBA

Additional: Started VC firm for cleantech; Senior Advisor at Sequoia

Key Focus: Marketing automation and customer lifetime value

Jeanne DeWitt Grosser

CBO (Chief Business Officer), Stripe

Tenure: 9+ years at Stripe

Joined When: Before any sales organization existed

Achievement: Built Americas revenue from ground zero

Prior Roles: CRO at Dialpad; decade at Google

Culture Builder: Created "Stripe Sales" culture; consumption model expertise

GSB Background: Top sales rep during her time as student

Armando Mann

First Head of Sales, Dropbox

Dropbox Achievement: Built initial sales organization from scratch

Prior: Google Maps sales (managed 200-person cap)

Education: HBS MBA

Operator: RelateIQ (sold to Salesforce), then Salesforce

Scale-up: Hopin (scaled $1-2M to $100M revenue in 18 months)

Current: Investor and advisor to growth companies

Andy McCall

General Partner, Andreessen Horowitz

Career Length: 28 years in sales & leadership

Split: First half in individual contributor, second half in leadership

Meraki: Built enterprise sales, acquired by Cisco for $1.2B (2012); now $2.5B/quarter revenue

Samsara: VP Global Sales—scaled from 15 to 1500+ sales reps

Ethics Focus: Strong emphasis on integrity and culture at scale

Current: VC investor and mentor to founders

Chris Degnan

Chief Revenue Officer, Snowflake

Model: Traditional top-down enterprise sales approach

Expertise: High-performance sales culture and execution

Company: Snowflake (cloud data platform, ~$100B+ market cap at peak)

Focus: Large enterprise deals, complex sales cycles, partner ecosystem

Contrast: Represents opposite end of spectrum from Atlassian's PLG model

Lesson: Different markets demand different sales approaches

1. Sales Learning Curve (3x Threshold)

From Peter Levine. A rep reaches 3x productivity around 12-18 months. Earlier hiring brings average productivity down.

Vanta example: Christina hit 3-4x quota alone before hiring
Timing of expansion reps affects overall quota achievement
New hire onboarding cost is real and material
Hiring for the problem vs. hiring for the task

2. LTV/CAC Analysis

Target ratio >3:1 for sustainability. Compares lifetime revenue per customer to acquisition cost.

Ollie: LTV $5K, CAC $1K → 4:1 ratio, 4-month payback
Mary: LTV $16K, CAC $5K → 2:1 profit-based ratio, 10-month payback
Payback period reveals cash flow impact
Segment-level analysis shows customer quality mix

3. PLG Decision Matrix

Determines if product-led growth is appropriate for your business.

Good Fit: Pre-existing need, developer persona, low price, self-serve
Bad Fit: Custom solutions, non-technical buyers, high ticket, political sales
Workday example: Complex enterprise software → PLG doesn't work
Can blend PLG with sales team (hybrid approach)

4. Hunt & Hold vs. Hunt & Grow

Two distinct post-sale account management approaches with different economics.

Hunt & Hold: New business + minimal account management
Hunt & Grow: New business + expansion/upsell focus
Depends on product stickiness and expansion potential
Affects comp structure, hiring, team structure

5. Consumption Model Economics

Revenue based on usage, not license. Common in SaaS platforms.

"It looks really bad until it's really good" (1-3 year payback)
Wine Bike example: Unpredictability from one deal to 1000% of quota
Shadow targets before enforcement (Stripe approach)
Leading indicators (usage signals) > lagging (revenue)

6. Team vs. Individual Quotas

Team-based quotas foster collaboration; individual quotas drive accountability.

Atlassian, Dropbox, Stripe all used team quotas
Benefits: collaboration, de-risking, culture alignment
Drawback: free-rider problem without clear accountability
Works best when reps have interdependent roles

7. Channel Partner Strategy

Third-party resellers as force multiplier for go-to-market.

Atlassian: ~30% of revenue through channel partners
Deal registration system prevents channel conflict
Trade margin vs. control tradeoff
Essential for non-English speaking markets

8. Multi-Product Timing

When should a sales organization expand to selling multiple products?

Atlassian started Act 2 (product expansion) early with 6 products
Most companies wait too long to expand product line
Harder to add complexity at 6000 employees than at 100
Requires product team partnership and training

9. 13 Root Causes of Sales Ethics Issues

Systemic drivers of ethical failures beyond individual intent.

Incentive structure misalignment (Wells Fargo 8-product quota)
Principal-agent problem (rep doesn't own outcome)
Pressure to achieve / hero culture (celebrate shortcuts)
Personality/aggression factors + sincerity questions
Status-based cultures + power dynamics + autonomy
Asymmetric information + lack of post-sale accountability
High payoffs for manipulative behavior

10. Capacity Model (20 Variables)

Diagnostic tool for forecasting and mid-year course correction.

Maps: Leads → Conversion → Win Rate → Deploy Time → Ramp → Segment Drop-off
Top-down (revenue goal) vs. bottoms-up (rep capacity) reconciliation
Identifies bottlenecks: pipeline generation, conversion, cycle time
Segment-by-segment analysis (SMB vs. Enterprise behaves differently)

11. Forecasting as Business Competence Proxy

Accuracy of forecast reveals quality of sales leadership and operational rigor.

Gold standard: Board company at ±3% every quarter
OptiGen example: Missed ONE quarter after 40 consecutive beats → lost 2/3 of market cap
Forecast credibility builds investor confidence and enables planning
System design: forecast accuracy as leadership KPI

1. Atlassian PLG Model

Boeing: 7,000 users spending $20K → could upgrade to millions
5,000 companies with 1,000+ active users (enterprise advocates)
Average ACV less than $30K
85 of Fortune 100 companies using Atlassian
375 of Fortune 500 companies using Atlassian
18-20 products in portfolio
Channel partners: ~30% of revenue
S&M spend: 17-18% of revenue (vs. 50%+ industry average)

Enterprise advocates measured on team-based quotas, response time, and NPS (not revenue)

Competed against Jive (traditional top-down, lost) and Rally

Company value: "Don't fuck the customer" - no dark patterns, clean UX

Kevin Egan became Chief Sales Officer with 3-4K person organization

Flying under procurement thresholds was strategic pricing decision

2. HubSpot: Ollie vs. Mary Segmentation

Brian Halligan used "CEO card" to pick Mary as target segment despite higher CAC

Both cohorts could have worked, but decision should have been faster

Wasted years not making definitive choice

Result: Revenue retention improved from 60% to 105%; Customer retention from 55% to 90%

Lesson: Better to pick wrong segment decisively than oscillate between segments

3. HubSpot Churn Crisis & Recovery

PROBLEM:
42% annual churn (450 of 1,000 customers churning per year)
Series B fundraising at $25M pre-money valuation

SOLUTION:
Matrix led investment of $12.5M (post-money: $37.5M)
Stopped rotating Ollie leads to new reps (account continuity)
Introduced clawback if customer churned within 7 months of sale
Added 80% retention kicker to compensation
Invested in account management function
Focused product roadmap on sticky features (marketing automation)
Implemented 2-axis pricing: plan type + contact database size

Churn was strategic weakness, not operational inefficiency

Clawbacks aligned rep incentives with customer success

Product stickiness is as important as sales execution

Pricing designed to grow with customer (expansion revenue)

Became model for SaaS metric improvements (NRR, retention)

4. Stripe Consumption Model: The Wine Bike Story

Philosophy: "It looks really bad until it's really good" (1-3 year payback)
Wine Bike example: One deal made entire startup segment's quota
Single rep hit 1,000% of quota from one customer

OPERATIONAL APPROACH:
Shadow targets before enforcement (test forecasting accuracy)
20-variable capacity model for forecasting
S&M spend: ~20% vs. industry average 50%
SDR function has "max two years left" (automation coming)
First year sold: held rep accountable for 365 days post go-live

Consumption-based revenue is volatile and unpredictable month-to-month

Leading indicators (transaction volume, API calls) matter more than revenue

Team must believe in the model during the ugly phase (year 1-2)

First-year accountability ensures customer success and expansion

Forecasting discipline prevents quarter-to-quarter surprises

5. Dropbox: Variable Compensation Removal

PROBLEM:
Reps were making 5x expected commission
No understanding of correct quota levels
Unpredictable cash compensation (variable was too high)

SOLUTION:
Removed variable compensation entirely
Replaced with: more equity + higher fixed salary
Set company-wide goal instead of individual quotas

OUTCOME:
Reps were ecstatic (predictable income)
Started helping automate sales (not hoarding deals)
Friends wanted to join the company (good employer brand)
Top predictor of deal close: "What's the price?" (wasn't on website)
Added pricing to website → conversion rate exploded

Variable compensation can be demotivating if unpredictable

Fixed compensation + equity aligns rep with company value creation

Reps moved from hoarding deals to helping peers (culture shift)

Pricing transparency reduced sales friction (key objection removed)

Nobody left the company when compensation structure changed

6. Dropbox Enterprise Expansion Failure

MISTAKE:
Hired 100 enterprise sales reps all at once
Fired them ALL 2 years later

ROOT CAUSE:
Hadn't invested in product for enterprise (still consumer-grade)
Hadn't invested in brand awareness in enterprise market
Hadn't built marketing for enterprise segment
Sales team was expected to solve product/brand/marketing deficits

CORRECT APPROACH:
Step-by-step expansion: 10 reps → 100 reps → 1,000 reps → 10,000 reps
"Moving up market is a company-wide, not sales-wide, decision"

Sales alone cannot move upmarket without product and marketing support

Scaling too fast (100 reps) when market wasn't ready is expensive failure

Each segment transition requires product adjustments, pricing, positioning

Company must invest 3-5 years in enterprise before scaling sales org

Lesson: Align sales scaling with product, marketing, and brand maturity

7. World Class Bull: Ethics Culture Case

INCIDENT:
Chris Knox (star rep, $3M+ annual quota): Stalked prospect's family
Also engaged in ghosting prospects strategically (fake unavailability)

ESCALATION:
Jeremy Silver (VP Sales): Sent company-wide email celebrating tactics
Called out Chris as "World Class Bull" exemplifying toughness

ANDY MCCALL'S VERDICT:
Don't fire Chris Knox (have stern talk, give chance to reform)
FIRE Jeremy Silver (VP held to higher standard—cultural guardian role)

THE TEST:
"What if every salesperson in the company did this?"
Company would be unethical, unprofitable, unsustainable

Sales managers are cultural guardians, not just revenue drivers

Hero culture (celebrating rule-breaking) destroys long-term culture

Senior leaders held to higher standard than individual contributors

Ethics test: "What if everyone did this?" reveals true company values

Top performers who violate values must be managed, not celebrated

8. Wells Fargo: Incentive Structure Gone Wrong

SCANDAL:
8 products per customer quota (aggressive cross-sell target)
Reps created fake accounts to hit quotas
5,300 employees were fired
$575M settlement with regulators

ROOT CAUSE:
Misaligned incentives (8 products for customers who needed 2-3)
Pressure culture + hero celebration of quota-hitters
Insufficient post-sale accountability
No ethical guardrails in performance management

SYSTEMIC FAILURE:
Leadership knew but didn't act (Carrie Tolstedt)

Incentive structures must align with customer value, not arbitrary targets

8 products per customer is fundamentally bad for the customer

Ethics failures are often systemic, not individual

Reputational damage from Wells Fargo scandal lasted years

Cautionary tale of what not to do with compensation design

9. Samsara: Building Ethical Culture at Scale

SCALE TRAJECTORY:
Started: ~15 enterprise sales reps
Grew to: 1,500+ sales reps

CULTURE BUILDING:
CEO set strong ethical tone from the top
Sales managers trained as cultural guardians (not just revenue hunters)
Implemented "Future Leaders" program:
• Identified high-performing reps interested in management
• Trained them in leadership + ethics before promotion
• Filtered for character + competence

CELEBRATION:
Celebrate RIGHT role models (values + performance)
Don't celebrate top performers who cut corners

Culture scales through systems, not hope

Manager selection is more important than rep selection

Can grow sales org 100x while maintaining strong culture

Future Leaders program prevents Peter Principle (promoting bad managers)

Ethics culture requires intentional investment, not just lip service

10. OptiGen Forecasting Excellence

GOLD STANDARD:
Board company at ±3% every quarter for 40+ consecutive quarters
Forecasting discipline as mark of operational excellence

FAILURE POINT:
Missed ONE quarter (first miss in 40 quarters)
Market reaction: Lost 2/3 of market cap in days

ROOT CAUSES:
Channel conflict and deal registration system failures
Revenue recognition issues in channel deals
Forecast model didn't account for channel volatility

LESSON:
One quarter miss destroys credibility built over years
Investors believe base case on forecast, not on product quality

Forecasting accuracy is make-or-break for investor confidence

Miss by 5%+ in one quarter and credibility is destroyed

Channel complexity makes forecasting harder (need deal registration discipline)

Revenue recognition accuracy is part of forecasting system

Lesson: Build 30-40% forecast margin (be conservative) to protect credibility

Pricing is a competitive moat, not an afterthought

Atlassian, Stripe case studies

Constraints breed creativity

Josh Goldberg, Atlassian model

Product-market fit must come before scaling sales

Dropbox enterprise failure case

Segment-based capacity modeling reveals bottlenecks

20-variable capacity model

Ethical tone must come from the CEO, not HR

Samsara, World Class Bull case

Celebrate the right role models (values + performance)

Samsara culture build

Moving up-market is a company-wide decision, not sales-wide

Dropbox enterprise expansion

Shadow targets before enforcement

Stripe consumption model

Team-based quotas work well for consumption models

Atlassian, Stripe, Dropbox

Split cohort testing reveals optimal segmentation

HubSpot Ollie vs. Mary

First-year sold accountability drives customer success

Stripe post-go-live model

Category creation > competing in existing categories

HubSpot "inbound marketing" creation

Hire for the problem you're solving, not the task

Armando Mann on Hopin scaling

Demand-driven models beat capacity-driven models long-term

Atlassian PLG vs. enterprise

Sales managers are cultural guardians first, revenue drivers second

World Class Bull, Samsara cases

LTV/CAC ratio >3 is required for sustainable growth

Economics framework

Compensation structure shapes culture and behavior

Dropbox variable removal, Wells Fargo

Forecasting accuracy is a proxy for operational excellence

OptiGen case study

Consumption models look bad until they look good (1-3 year payback)

Stripe, Stripe Wine Bike

Leading indicators matter more than lagging in consumption models

Stripe framework

Channel partners are force multipliers but require deal registration discipline

Atlassian 30% channel revenue

Multi-product expansion is easier at small scale than large scale

Atlassian Act 2 timing

Incentive misalignment is a root cause of ethical failures

13 root causes framework, Wells Fargo

Sales rep learning curve is real (3x by month 12-18)

Sales Learning Curve framework

Product stickiness is as important as sales execution

HubSpot churn crisis recovery

Pricing on website reduces sales friction significantly

Dropbox case study

The ethics test: "What if every salesperson did this?"

World Class Bull case

Account continuity matters (don't rotate leads constantly)

HubSpot churn fix

Clawbacks align rep incentives with customer success

HubSpot churn crisis, retention kicker

You don't scale from toddler to adult in one jump

Armando Mann on market expansion

The best companies think holistically about GTM, not just sales

Course theme

Don't fuck the customer.

— Jay Simons (Atlassian company value)

We were bought, not sold.

— Jay Simons (on Atlassian's PLG model)

It looks really bad until it's really good.

— Jeanne DeWitt Grosser (on consumption models)

I personally think the sales development function today has max two years left.

— Jeanne DeWitt Grosser (on SDR automation)

Sales compensation is broken. I am not a fan of the coin-operated aspect.

— Jeanne DeWitt Grosser (on variable comp)

If you don't have integrity, you really want them to be dumb and lazy.

— Warren Buffett (via Andy McCall, on ethics)

Culture eats strategy for breakfast.

— Peter Drucker (via Andy McCall)

What if every salesperson did this?

— Desiree (the key ethics test)

1 + 1 + 1 = 10

— Steve Jobs (inspired Brian Halligan's HubSpot concept)

Give me $2 of venture money and I'll show you $1 of revenue.

— Common VC joke (on SaaS unit economics)

Build the parachute while you're falling.

— Armando Mann (on Hopin scaling)

We priced just above free to beat open source.

— Jay Simons (on Atlassian pricing strategy)

Anyone could hire us - we flew under procurement thresholds.

— Jay Simons (on product-led growth)

There's sales@atlassian.com - somebody responds to those.

— Armando Mann (to Drew Houston, on low-touch sales)

Inbound demand is truly like crack for salespeople.

— Jeanne DeWitt Grosser (on demand gen quality)

The #1 reason why anybody works hard is: not get fired.

— Armando Mann (on motivation)

Hiring is not a choice, it's a privilege.

— Armando Mann (on company culture building)

A company that sells without needing sales is awesome.

— Josh Goldberg (on demand generation)

Constraints breed creativity.

— Josh Goldberg (on Atlassian's model)

You don't go from toddler to adult in one jump.

— Armando Mann (on market expansion)

We were a t-shirt making company and a pricing packaging company.

— Jay Simons (on Atlassian's GTM strategy)

I would rather start lean than have to fundamentally change the church.

— Jeanne DeWitt Grosser (on efficient GTM)

Pick the highest possible quota without being totally unfair.

— Jeanne DeWitt Grosser (on shadow targets)

Most companies' CAC goes up over time.

— Brian Halligan (on GTM efficiency)

The world is really, really small.

— Josh Goldberg (on GSB network effects)

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